Anger at ‘hidden’ funding cuts

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COUNCILS are counting the true cost of the cuts in Government grant funding announced on Monday.

All have hit out at the hidden cuts behind the Secretary of State for Communities and Local Government Eric Pickles’ statement which played down the impact.

Mr Pickles said: “There has been a great deal of speculation and scaremongering about what the implications of the local government settlement might be. The reality is that despite the toughest economic circumstances in recent memory, the Coalition Government will ensure that next year the average reduction in councils’ spending power will be 4.4 per cent.”

Councils say he is talking about estimated spending power not the actual grants, which are being cut by as much as 17 per cent over last year when they were expected to be about 10 per cent down. The councils’ spending power depends on how well they can make up the deficiency.

In addition, though he claimed the cuts were between four and eight per cent, some councils face higher spending power cuts, according to his own department’s figures.

Breckland and Babergh councils will see their spending power down by 8.9 and 8.45 per cent respectively,

The Government has avoided a fixed level of cut across the board because it would hit more deprived areas harder, due to them getting more Government funding than what Mr Pickles called ‘more self-sufficient councils’. His department explained that with a 10 per cent cut, a council that had £70 million last year would lose £7 million, whereas one getting £20 million would only lose £2 million.

A £650 million fund has been set aside to encourage councils to freeze their council tax levels. St Edmundsbury, for example, would get an extra 2.5 per cent from Government – £168,000 – if it freezes tax.

All the councils said it was too early to say how the higher than expected grant cuts would hit their services and staffing levels.

St Edmundsbury

St Edmundsbury had made £2 million in savings for 2011/12, anticipating a £5.667 million grant, or about 10 per cent down on last year, but will get £5.21 million, which is 17.3 per cent down. If they get more for freezing Council Tax, they are still 14.6 per cent down.

Council leader John Griffiths said: “The reality is St Edmundsbury will have to find extra savings of £212,000 above what we’d anticipated, which were serious savings.

“We’re determined to make the best of it and will freeze Council Tax while continuing efforts to make savings without impacting on the quality of our services. It won’t be easy.”

A spokesman said the council should be able to cover the gap by digging into its reserves, but they expected a further cut in grant next year of 11.9 per cent.

Forest Heath

Before the General Election Forest Heath identified £7 million of savings but is now having to ask its departments to cut a further 30 per cent from their 2011/12 budgets.

Council leader Geoffrey Jaggard said: “The figure of £4,507,000 is below what we were expecting, even after making adjustments for the Chancellor’s announcements in October.

“The figure represents a drop in grant of £722,000 for 2011/12, which represents 13.8 per cent less than we received last year. Our settlement for 2012/13 is reduced by a further £495,000, which equates to 10.9 per cent.”

Breckland

Breckland leader William Nunn feared the final level of grants could be even lower than the 13.8 per cent cut on last year’s funding, but he was upbeat about meeting the challenge.

Breckland is getting £9.247 million in 2011/12 and £8.301 million in 2012/13. But Cllr Nunn said: “There are other grants which we’re not yet clear on but it seems the net reduction in government grant could be even higher.

“That said, we are already working to take the necessary steps to produce savings without cuts in frontline services.”

He said a shared management team they were creating with South Holland would save 35 per cent on senior management costs.

Mid Suffolk

Cllr Derrick Hailey, Mid Suffolk’s deputy leader and portfolio holder for finance and resources, admitted to feeling frustrated that after all the efforts to meet the 10 per cent cut anticipated, they now have to look for another 5.8 per cent, about £200,000.

“Staff at Mid Suffolk have worked miracles to get where we were,” he said.

“Having got a balanced budget, which was challenging, we now face an even bigger problem. It’s small district councils, especially rural ones, that have been hit hardest.”

He was particularly angry at the way Mr Pickles had used the spending power figures. “When I saw those figures I hit the roof,” he said. “That’s misleading the public in no uncertain terms.”

He added: “We’ve done a lot of planning over the last three years. We’re the best council in the country for efficiency savings but there comes a time when you have to ask where do we go from here?”

Babergh

Babergh strategy committee chairman Nick Ridley warned the merger with Mid Suffolk would ‘only partially offset’ the shortfall they face of around 15 per cent, with the council’s grant falling from £5.5 million last year to £4.7 million for 2011/12.

Cllr Ridley said: “This is as bad as it could realistically be for Babergh. At first glance it looks as if we will be expected to make savings of up to 25 per cent in the next two years, which amounts to savage cuts on an already tightly run council.”

Suffolk County Council

Suffolk County Council says it has to save £40 million, or 12.7 per cent, next year as its main grant drops from £212.2 million last year to £185.2 for 2011/12, but like all counties it faces a complex package of funding changes that make it difficult to immediately see what the final figures will be.

Cllr Jane Storey, portfolio holder for resources and finances, called the cuts ‘complex’ but said the council had legislated for them.

“We need to make savings totalling more than £40 million. This is in line with our recent planning assumptions. As we analyse the settlement figures and get further into the detail the amount we need to save may change,” she said.

“This is a challenging settlement and will require tough decisions to be taken as part of next years budget settling process.”

Norfolk County Council

Though Mr Pickles’ department says Norfolk will only lose about two per cent of its spending power, it faces a 10.3 per cent cut in grant, but there are also complex changes to the way counties are funded.

Leader Derrick Murphy said: “This is an extraordinarily complex funding announce-ment and it will take some days to get to the bottom of what it means for the people of Norfolk. We know for certain we have lost some £30 million in formula [main] grant.”

Norfolk had anticipated making £55 million saving for the coming year but Cllr Murphy said that would not be enough.