North East councils braced for £89m cut in central funding
THE North East faces an £89.7 million cut in funding from central government for council services over two years.
It means less money for services including care for the elderly and children’s services.
The Government has published its funding plans for local councils, and it includes cutting the main government grant for local authorities, known as “settlement funding”, between 2017-18, the current financial year, and 2019-20.
However, total funding for North East authorities is expected to grow when increases to council tax are taken into account. This includes a “social care precept”, which is added to council tax bills specifically to pay for social care.
Councils will also receive a dedicated government grant to improve social care and funding for build new homes.
It means total funding local authority, known as “core spending power”, will increase by £41.5 million over two years.
Local Government Secretary Sajid Javid said councils would be allowed to increase council tax by 3%, up from the current limit of 2%, because inflation had risen.
Authorities that want to breach this limit must gain approval from residents in a local referendum.
He said: “While we all want to ease growing pressure on local government services, I’m sure none of us want to see hard-working taxpayers saddled with ever-higher bills.
“This settlement strikes a balance between those two aims, hiving councils the ability to increase their core council tax requirement by an additional 1% without a local referendum – bringing the core principle in line with inflation.”
But North Durham MP Kevan Jones said the Government needed to remember that some authorities depended more on central government grants than others.
It meant County Durham had been hit harder by cuts than councils such as Surrey, which received a higher proportion of its income from council tax, he said.
Councillor Iain Malcolm, leader of South Tyneside Council, said: “Whilst South Tyneside, like many other councils, reluctantly agreed to a four-year finance settlement Savid Javid’s speech on the local government finance settlement still has not addressed local government funding long term.
“The minister spoke of ‘a formal consultation on a review of relative needs and resources’ – but no firm date was given. This is something that impacts on everyone’s lives.
“The services that councils provide reach out to everyone, without fair funding how can we provide our residents with the vital services that they need? “Research by the Institute of Fiscal Studies has confirmed that South Tyneside has been the third hardest hit council in the country. Chronic underfunding from Central Government continues. Local government finances continue to be squeezed.”