By Richard Johnstone | 24 June 2014
Greater transparency over the impact of government cuts on council funding is needed and ministers must stick to an agreed measure of local authority spending power, the chair of the House of Commons’ communities and local government select committee has said.
Clive Betts said that a consistent measure was needed to enable proper public scrutiny of local authority finances.
Betts had previously made a formal complaint to the statistics watchdog over Prime Minister David Cameron’s claim that future local government spending would fall by only 2.3% in 2015/16. This is despite the Spending Review statement setting out details of a 10% cut.
Betts said the government had repeatedly failed to set out the full calculations behind Cameron’s claim.
In correspondence to the committee, neither Chief Secretary to the Treasury Danny Alexander nor Local Government Secretary Eric Pickles had been able to provide details of the 2.3% claim, he added. It remained unclear, for example, which funding streams are included.
‘It is frustrating that the government has an established measure for presenting local government spending power, but, rather than use that method – I assume because the figure wasn’t rosy enough – the prime minister comes up with a “better” figure based on an unexplained new methodology,’ Betts stated.
‘In spite of my repeated requests, the government will still not provide a full breakdown of how this figure was calculated. My committee cannot carry out effective scrutiny if the government chooses to play fast and loose with important data on public funding.’
A range of different figures on local government finance have now been produced in recent years, he said. ‘Ministers have to stop quoting whichever figure best suits their argument on any given occasion. Without an agreed single measure of local government spending power there can be no public transparency or open debate on council funding.’
In correspondence published today, DCLG figures for local government spending power indicate a reduction in spending power between 2014/15 and 2015/16 of 3.3% in real terms (1.8% in cash terms). This compares to the 2.3% real terms cut, which equated to a 0.5% reduction in cash terms.
By contrast, the government’s established ‘spending power’ measure shows a real-terms reduction of 3.3% between 2014/15 and 2015/16, Betts said.
Responding to the report, Local Government Association chair Sir Merrick Cockell said: ‘We fully support the committee’s call for government to provide maximum transparency on how council funding is calculated and only use headline figures which can be fully substantiated. Councils need to be able to make accurate financial plans based on clear information but recent funding settlements have failed to provide the certainty that councils need.
‘This uncertainty means councils are being forced to assume the worst and plan for it. This is damaging councils’ ability to make well-informed financial plans and magnifies the impact of already significant cuts to funding for local services such as caring for the elderly, collecting bins and protecting children.’
