Councils: Funding cuts hit 12.1%

The Communities Secretary, Eric Pickles, addressing the Commons

Eric Pickles said local services should not be badly affected

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English councils are assessing the impact of nearly 10% cuts to their central government funding next year.

Labour says the poorest neighbourhoods will be “hardest hit” while the Local Government Association said it was the toughest settlement “in living memory”.

Councils with the largest cuts to their spending power include Great Yarmouth, Barrow-in-Furness and Hastings.

The government says it has taken steps to protect the poorest areas which rely most heavily on public sector services.

They announced on Monday that the “formula grant” from Whitehall would be reduced by 9.9% in 2011/2012 and by 7.3% in 2012/2013 – as part of a policy to cut central funding to local authorities by 28% over four years.

Communities Secretary Eric Pickles said councils would see their “spending power” reduced by on average 4.4% next year.

Authorities facing the biggest cuts in their “spending power” – which also includes other grants and council income – include Great Yarmouth, which sees a 26% cut in 2011-12 and Barrow-in-Furness, which sees a 24% cut.

But any authority facing cuts of more than 8.9% will receive a “transition grant” – effectively capping the cut at 8.9%. However the original cut will be used as the baseline for 2012-13 figures.

Mr Pickles told MPs on Monday he had given the Local Government Association “what they asked for. I have made sure that no authority will face more than an 8.9% reduction in spending power for either 2011 or 2012/13”.

He said it would be a “progressive and fair” settlement with more money channelled to those parts of England in most need.

Mr Pickles said he had sought to insulate areas which most heavily depend on central government funding by creating four separate grant bands for councils, setting different limits for their reductions and protecting councils against the sharper grant reductions.

But Labour’s Stephen Timms said the most disadvantaged communities would be hit hardest. He asked: “Why is it looking through the list of the London borough graph changes that the biggest losses in absolute terms and in percentage terms are in local authorities where the levels of disadvantaged are the greatest?”

And Shadow Communities Secretary Caroline Flint said: “All Eric Pickles’ warm words about transitional funds can’t disguise the truth – the poorest neighbourhoods will be hardest hit while the better off will do best as a result of the choices the coalition government are making.”

The figures – published for every council – are smaller than the overall 9.9% because they include all other grants and income that councils get, such as council tax and NHS funding.

Mr Pickles said that £650m would be set aside so every council could freeze council tax without hitting local services. The government would provide those who froze council tax with the equivalent of a 2.5% increase in funding.

To help protect front-line budgets, £200m would be provided to help councils modernise and cut back office costs, Mr Pickles said.

Chairman of the Local Government Association Baroness Eaton said: “This is the toughest local government finance settlement in living memory.”

She said a £6.5bn funding shortfall over the next year meant cuts to services were “inevitable”.

“The government has recognised the impact the cuts will have on those areas of the country that rely most heavily on the public sector and has provided a limited amount of new money to help those areas cope.

“However, it still remains the case that the cuts are frontloaded rather than spread evenly across the four years. Councils now face incredibly tough choices about the services they continue to provide and those they will have to cut. “

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

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