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£5.5BN COST OF NEIGHBOURHOODS

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Shocking price of neighbourhoods casts devolution debate into turmoil...
Shocking price of neighbourhoods casts devolution debate into turmoil

By Nick Golding

Fears the Treasury could resist devolution on the grounds of cost have been fuelled by news the price of empowering neighbourhoods could hit£5.5bn.

The figure, estimated by the Local Government Information Unit (LGIU), is based on statistics from the 2005 government report The safer and stronger communities fund: The neighbourhood element. The study says£516,000 a year will be required for each neighbourhood to support a manager, wardens, outreach workers and funding for local projects.

'Theoretically, the investment required to ensure a minimum level of neighbourhood capacity across England's 10,661 neighbourhoods would be£5.5bn,' said LGIU senior policy officer Ed Cox.

Mr Cox made his calculation in the unit's Empowering neighbourhoods pamphlet launched last week.

If the estimate proves correct, chancellor Gordon Brown is certain to refuse such a vast increase in expenditure, potentially scuppering the proposed double devolution deal under which Whitehall powers are given to councils if they in turn pass power on to communities.

Mr Cox made clear that the cost projection was speculative, and could incorporate some funding from existing pots, but told LGC he believed neighbourhoods would in any case prove costly.

'There's no one-size-fits-all model. Some neighbourhoods will be more resource intensive and some will be less resource intensive - it's very difficult to put a figure on how much neighbourhood arrangements will cost,' he said.

Neighbourhood empowerment is expected to be a key theme of the forthcoming local government white paper, whose arrival date has been thrown into doubt by the recent Cabinet reshuffle.

Ruth Kelly, the new secretary of state for communities and local government, has already been warned by the prime minister that local government reform will take place in a climate of a 'lower growth in funding than in recent years'.

Mark Rickard, head of branch, democracy and local government, at the Department for Communities & Local Government, told LGC: 'We are very conscious of the issue of cost. We are very careful to look at what price is anticipated to be of various proposals.'

The cost of neighbourhood empowerment has already caused unease in local government, which could lose conventional funding if the DCLG has to divert its funds into more local organisations.

Matthew Warburton, the Local Government Association's head of strategy, said: 'Empowering communities doesn't come for free. The scariest thing is the£5.5bn bill.

'I can already see the Daily Mail headlines about councils spending their money on neighbourhood development workers and social capital workers, rather than teachers and police officers.'

A number of councillors have expressed scepticism about the proposed devolution of responsibilities to community groups (LGC, 16 February). Many fear unrepresentative cliques could gain undue influence or apathy will make neighbourhood empowerment unworkable.

LGC's discovery last week that ministers are considering giving residents a right to petition to increase expenditure on services has already led to fears that councils will find it hard to reconcile the competing demands of neighbourhoods and their existing spending requirements.

Steve Freer, the chief executive of the Chartered Institute of Public Finance & Accountancy, warned there was a danger the proposal to introduce petitions could result in a 'lobbyists' charter', forcing councils to set money aside for a contingency fund.

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