Stockton's Infinity Bridge

Association of North East Councils takes case on finance to Westminster

06 July 2011

Politicians, policy advisers, business representatives and local government organisations are meeting in the House of Commons today (6 July) for a briefing organised by the Association of North East Councils in relation to proposals for a review of local government finance.

The event provides a platform for highlighting the issues and implications for North East councils and some of the unintended consequences for this area of the country if key principles of fairness, equity and need are not reflected in future funding decisions by the Government.

ANEC is launching a report informed by the 12 local authorities in the North East, following a three month task group involving local government politicians on a cross party basis.

The report makes the case for why any new system for financing councils should take into consideration the needs of people and places in all parts of the country, no matter what their needs are, who they are, or where they live.

Councils in the North East highlight their concerns about a move to the localisation of Business Rates, which is a central feature of the Government's proposed reforms for local government finance. Simple localisation would re-allocate resources to councils with strong economies - wealthy and business rich parts of London and the South East led by Westminster and the City of London and in areas where there is a vast mix of high value national and international businesses and retail sites. Those losing most would be poorer areas, smaller commercial and business areas, rural areas and those with a high rate of out-commuting to neighbouring urban conurbations.

The report makes the argument that any new system has to ensure that it does not lead to areas with strong Business Rates growth being stimulated to grow bigger, at too fast a pace, creating a spiral of decline in poorer areas.

Councils in the North East are urging the Government to ensure that any new system has a robust, fair, equitable and independent method of identifying need. It is crucial that councils in the North East have sufficient means to address their more complex and demanding local needs. Additional cost pressures facing this area of the country include an ageing population, which is growing faster than the English average, as well as higher levels of deprivation, child poverty and poor health compared with the English average.

ANEC's report highlights a number of case studies that illustrate the higher level of need and demand for services in councils across the North East compared with some councils in the South East.

For example, in Wokingham, there are 22 looked after children per 10,000 population. In Middlesbrough, the 9th most deprived local authority area in England, there are 104 per 10,000 population - almost five times higher. Durham spends more on older people than similar councils such as Surrey County Council, because of greater demand for services. Almost 1.5 times as many people are in receipt of community service per 1,000 population in Durham than in Surrey; 2.4 times as many receive a Home Care service per 1,000 population; higher levels of deprivation mean more people require social services, many who are unable to finance their care.

ANEC will be urging the Government to consider the principles, issues and case studies highlighted in its report, to form a vital part any new system and will be contributing fully to the consultation on the proposals, due out imminently.

Cllr Simon Henig, Vice Chair of ANEC, who chaired the Local Government Task Group in the North East, said: "We cannot underestimate the importance of this review of local government finance for communities across the North East. If the issues we are highlighting are not adequately addressed, important services such as health and social care, could suffer. Local authorities need to have adequate resources to meet the need for services in their areas both now and in the future. We believe that any new system should be based on the principles of fairness, equity and need, so that the resources available to our 12 councils reflect the needs of our communities."

Cllr Paul Watson, Chair of ANEC, said: "In areas such as the North East, where the economy has furthest to develop, it is important for councils to be incentivised to grow their economies and retain the income from such growth. The North East is already feeling the economic effects of the actions of its competitors in Scotland, Wales and Northern Ireland who are empowered through devolution to create incentives for businesses to locate in their areas. The playing field is not level and we would urge the Government to explore with us alternatives to stimulate a strong economic future for all areas of the country."

For further information please contact Bethan Hughes on 0191 261 3917 or 07957 823 864 (mobile); email bethan.hughes@northeastcouncils.gov.uk