Stockton's Infinity Bridge

ANEC responds to proposed financial settlement for local government

17 January 2011

The Association has responded to the Department for Communities and Local Government (DCLG) provisional Financial Settlement for Local Government consultation. The proposals represent a loss to the region of about £209m for 2011/12 and are considered disproportionate to other areas of England, with the North East losing almost £31 per head more than the England average.

The Association's response submitted to Government today (17 January) was informed by North East local government and sets out five key issues of interest and concern to a number of local authorities collectively in this area of the country. It aims to provide Ministers and Civil Servants in DCLG and HM Treasury with further critical information in advance of Government finalising the Local Government Finance Report (England) 2011-12 and the Draft Local Government Finance Report (England) 2012-13.

The five key issues highlighted in the response are:

1. The front-loading of budget reductions which mean that local authorities will need to make the largest savings in 2011/12, rather than spreading them across the Spending Review period.

2. The level of cuts in the North East, which appear to be disproportionate to other areas in England, could be mitigated by using a £ per head approach to reducing budgets, rather than a standard percentage, which can leave poorer areas worse off.

3. The loss of Area Based Grants including Working Neighbourhood Fund, will impact on 10 out of 12 local authorities in the North East, while the Transition Fund will only benefit three North East local authorities (South Tyneside, Middlesbrough and Hartlepool) and will only be available for one year.

4. The need for further flexibilities and tools to manage the budget reduction such as the use of Business Rates and increased capitalisation powers to manage the front-loading of cuts.

5. Technical issues, use of data and the Association's request to be involved in the Government's forthcoming review of local government finance.

The loss in 'Spending power' equates to a reduction of £80.21 per head of population in the North East compared to the England average loss of £49.30 per head and the South East reduction of £21 per head. The Association has highlighted that some of the technical measures employed by the Government, appear to have had the effect of reducing allocations to areas with higher levels of deprivation, such as the North East.

In addition, the loss of Working Neighbourhoods Fund means that the North East will lose a further £73m. This fund targeted areas with higher levels of deprivation and aimed to support local communities into employment opportunities and its loss will mean that support in this area will be reduced.

The Association is seeking further discussions with the Government both at DCLG and HM Treasury on the issues raised within the response and as part of the forthcoming Review of Local Government Finance which will be taking place in 2011.

View a copy of the Association's response.

For further information please contact Bethan Hughes, Communications Officer, on 0191 261 3917, email