By Richard Johnstone | 20 December 2013
The amount of central government funding for local authorities in England is to fall by more than 9% next year – three times the reduction in spending power announced by ministers, CIPFA figures have shown.
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Data produced for CIPFA by Pixel Financial Consulting show the provisional local government finance settlement, published on Wednesday, included a reduction of 9.42% in settlement funding assessment from the Department for Local Government and Communities.
This total is made up of baseline funding set by DCLG as part of business rates localisation and each authority’s revenue support grant allocation. This is broadly similar to the old formula grant funding measure, replaced when business rates retention was introduced in April.
The analysis of the figures also found that the reduction in central funding would be above average in both metropolitan areas (9.98%) and shires (9.54%) in 2014/15, but the cut to authorities in London was smaller (8.52%).
The DCLG said council spending power – a calculation of all government grants, including funding transferred from the NHS to pay for social care, and locally-raised revenue such as council tax – would fall by an average of 2.9% in England.
Greater reductions in spending power have been indicated for London boroughs – down 4.5% on average – and metropolitan districts, cut by 4.2%. Spending power in cities will also fall by more than average.
CIPFA’s figures also highlighted there would be greater reductions in central government support in 2015/16. According to illustrative 2015/16 settlement funding assessment figures, dedicated DCLG support for councils in England will fall by 13.17%.
This is made up of an 11.44% decrease in London, a 13.38% drop in shire areas and a 14.28% fall in metropolitan areas.
DCLG figures stated the average cut to council spending power in 2015/16 would be 1.8%.
CIPFA chief executive Rob Whiteman said DCLG’s funding announcement was ‘stronger on spin and misleading presentation than the technically sound explanation that councils and the public would expect’.
He added: 'As these figures demonstrate this week’s statement on the local government settlement was by any usual standards an unfortunately opaque announcement.
'It demonstrates yet again how desperately we need to take the see-saw of party politics out of the allocation of funding and instead base it upon objectivity, transparency and predictability.'
