Councils wait to discover funding settlement

PUBLISHED: 06:30 17 December 2012

Communities Secretary Eric Pickles, Dave Thompson/PA Wire

Communities Secretary Eric Pickles, Dave Thompson/PA Wire

For weeks they have nervously wondered what a rotund, white-haired fellow will bring them this Christmas; not children waiting for Santa, but council leaders waiting for Eric Pickles.

The communities secretary and his ministers, including Great Yarmouth MP Brandon Lewis, are expected to finally confirm on Thursday how much money councils will get over the next financial year.

The Local Government Finance Settlement for 2013/14 was due weeks ago, but with George Osborne’s autumn statement pushed deep into winter, a number of big forward-looking announcements were delayed.

So will the wait have been worth it? If the signs are anything to go by the answer for Norfolk’s council leaders will be “no”.

South Norfolk leader John Fuller said: “We are in the third year of a four year settlement which aims to see a 28pc reduction in funding for councils.

“So the probable size of the settlement coming has been well signalled.”

He added: “What will come, will reinforce the notion that we need to decrease costs or generate additional income.”

While Mr Osborne indicated local government would avoid additional cuts next year, tough challenges remain.

The large 28pc cut councils are enduring over four years compares to an average eight per cent reduction for Whitehall departments over the same period.

On top of the cuts councils are fighting on a second front, with the cost of social care burgeoning as people live longer.

Norwich City Council leader Brenda Arthur said: “It is tough out there for all of us. We’ve saved £20m over the past four years by looking at new ways of working. It was only last year that we started making any cuts in front line services.

“Meanwhile we know we’ve got savings to make next year as well.”

She added: “There are loads of rumours about what the settlement is going to look like but till we know, we can’t be definitive; we are looking at various models from pessimistic ones, to ones that are more kind.”

Ministers accept councils have tough choices, but say the need to reduce the national deficit means costs must be cut.

They highlight their measures designed to allow councils to make extra money, for example the New Homes Bonus which rewards local authorities for encouraging housing development; Norfolk’s districts will receive £2.9m over from the scheme next year.

There is also the initiative to see councils retaining a proportion of any growth in business rates, the idea being that if they encourage a bigger private sector they too will benefit.

Councils are cutting costs too, sharing back room staff between authorities, streamlining operations and undertaking redundancy programmes. But some are coping better than others.

Great Yarmouth Borough Council is likely to discover on Thursday whether the government will answer its plea for additional funding to help it out of the financial hole it has sunken into.

The council, more reliant on central government funding than others, was given a two year “transition” grant in 2011 to help it adjust to the loss of income from Whitehall.

The Conservative administration at the time sought to cut costs by entering into a service sharing deal with other district councils, but when Labour took control in May new leader Trevor Wainwright scrapped the arrangement.

He argued the savings would have been minimal, but with the transition grant running out this year the council has found itself having to find an extra £10m to make ends meet in the next three years.

A voluntary redundancy programme involving dozens of staff and a new structure which will see senior management posts cut from 34 to 16 are the result. But Mr Wainwright has asked for the transition fund to be extended to help the authority make ends meet.

Ministers, however, have expressed displeasure at a plan to hand Yarmouth’s out-going MD Richard Packham a £136,000 pay-off, with deputy MD Jane Ratcliffe positioned to take up his role.

If further transition funding is provided on Thursday it is likely to have conditions attached. Potential demands may include the authority entering into service sharing arrangements or further rethinking its senior management team.

Questioned on the approaching announcement, Mr Lewis said: “Councils will have to wait and see what the settlement holds.”

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