Council cuts: Find out how much money your council is losing

Norfolk County Council. County Hall. Photo : Steve Adams

Norfolk County Council. County Hall. Photo : Steve Adams - Credit: Archant

Councils in England are set to see their funding cut by 2.8pc next year as part of a shake-up of the way town halls are financed.

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Communities and Local Government Secretary Greg Clark announced details of a new four-year settlement, with councils expected to rely on funds raised locally rather than Whitehall grants by the end of the decade.

Labour described the funding settlement as 'cuts, cuts and more cuts' amounting to billions of pounds.

Under the provisional funding settlement for 2016-17, councils' 'spending power' per dwelling will fall from £1,881 this year to £1,829.

Local government was already braced for cuts of 6.7% by 2019-20, which had been announced in the Autumn Statement in November.

Mr Clark set out the changes in the way councils would be funded in future, offering four-year budgets for local authorities as the system moves away from grants to town halls.

He told MPs: 'For the first time ever I offer a guaranteed budget to every council which desires one and which can demonstrate efficiency savings for next year and for every year of this Parliament.

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'A four-year budget to give certainty and confidence.'

Under the changes, by 2020 authorities will raise money through their council tax and the retention of all the business rates levied on firms in their area.

Authorities will be able to raise council tax by 2% before triggering a referendum, but a central government funding scheme aimed at encouraging town halls to freeze the levy has been scrapped.

In his Autumn Statement, George Osborne had already given town halls the power to raise tax by an additional 2% to fund social care.

Mr Clark said the plans amounted to £3.5 billion of extra support for adult social care services, up to £2 billion from the council tax rise and a further £1.5 billion to help authorities work with their local NHS providers to address care pressures.

Meanwhile, the New Homes Bonus which rewards local authorities for house building will be extended indefinitely.

Shadow communities secretary Jon Trickett said: 'The message of this settlement is the same as every other one under the Tories: cuts, cuts and more cuts.'

'This settlement reduces the central government grant to local government by more than half and doesn't acknowledge the additional spending pressures on local government finances which amount to double the total amount local government is to receive from Whitehall.'

Rob Whiteman, chief executive of the Chartered Institute of Public Finance and Accountancy (CIPFA), warned the move to locally-raised revenue introduced a 'real risk to council finances'.

He said: 'There will be winners and losers in this local authority settlement. Top-tier local authorities are set to benefit as high-demand critical services, such as social care, receive welcome direct support.

'However, it is likely that district councils will find a greater squeeze on their budgets as the new homes bonus is reduced by around £800 million between now and 2019-20.

'We welcome the move to localised funding, which will give local people more power to set priorities for their communities, but there is still a long way to go.

'However, replacing central government funding with fully retained business rate revenues introduces real risk to council finances. It is something of a gamble for many vital public services - as the assumptions underpinning greater localisation are that the economy continues to grow and a much greater number of new homes are built, which recent experience shows is anything but certain.'

Liberal Democrat local government spokeswoman Baroness Thornhill said: 'It is absurd for the Government to say that they want to increase powers for councils, while at the same time slashing their funding by almost 7%.

'Not only has the Secretary of State announced devastating cuts, but the extra money for adult social care - arguably the biggest challenge facing councils - does not go far enough.

'The social care precept will raise less than a third of what is needed for social care by 2020. It shows the Government is simply not taking the scale of the challenge to councils seriously.'