By Lucy Phillips
13 December 2010
Council grant funding will be cut by an average of 4.4% next year, Local Government Secretary Eric Pickles has announced.
Pickles also said that no council would face a grant cut of more than 8.9% either next year or in 2012/13. Reading out the long-awaited local government finance settlement in the Commons this afternoon, the secretary of state said he had sought to calm concerns over ‘front-loading’ of budget cuts.
Today’s settlement distributes £29bn of formula grant funding announced in October’s Comprehensive Spending Review to local authorities for next year and £27bn for 2012/13.
Pickles also pledged £650m to fund a one-year freeze on council tax.
He called the settlement ‘fair and sustainable’ as well as ‘progressive’. The settlement gave more weight to parts of the country most in need, directed more to the North than the South and to deprived urban areas.
Meanwhile, councils most dependent on central government funding will be ‘insulated’ from the worst of the cuts by a new weighting of the formula, he said. Councils have been grouped into four bands according to their reliance on Whitehall, with floors set for protection.
Pickles said: ‘There has been a great deal of speculation and scaremongering about what the implications of the local government settlement might be. The reality is that despite the toughest economic circumstances in recent memory, the coalition government will ensure that next year the average cut in councils’ spending power will be 4.4%.
‘By adopting an intelligent and fair approach to the way funding is allocated we have been able to ensure those parts of the country that are most reliant on central funding continue to get the lion’s share of the taxpayer’s money that is available.’
The Local Government Association called the announcement ‘the toughest local government finance settlement in living memory’ and maintained that the cuts were front-loaded rather than spread evenly across the four years of the Spending Review.
LGA chair Baroness Margaret Eaton said: ‘Councils now face incredibly tough choices about the services they continue to provide and those they will have to cut.’
About 30 councils will experience the maximum cut of 8.9% next year. Among them are the London boroughs of Hackney, Tower Hamlets and Newham as well as Manchester, Liverpool, Doncaster, Middlesbrough and West Somerset.
Only Dorset will see a small increase of 0.25% in its grant. Other authorities faring relatively well in the settlement include Isles of Scilly (–0.14%), Surrey (–0.31%), Buckinghamshire (–0.60%), Richmond Upon Thames (–0.61%), Wokingham (–0.63%), West Sussex (–0.65%), Hampshire (–0.95%) and Poole (–0.97).
Pickles also pledged £85m in ‘transitional funding’ for 2011/12 and £14m in 2012/13 to support moves towards shared services and other forms of ‘modernisation’.
