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Extra support for hardest hit

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The government yesterday unveiled a further £9m in support for sparsely populated authorities as part of the final version of the local government settlement.

Local government minister Brandon Lewis announced an extra £8.5m “efficiency support” for 95 rural district and unitary authorities following complaints that damping within the system had removed additional money intended for councils serving sparsely populated areas. The additional funding includes £232,000 for fire authorities. Mr Lewis said the government had recognised the concerns of rural areas and provided funds to “support the delivery…of efficiencies in services”.

He added: “The gap [in funding for rural and urban councils] is narrowing thanks to changes that we made in the settlement. It is becoming smaller than it ever was under the previous government, who put the finances in a situation that was detrimental to rural areas across the country.”

However, some of those who had campaigned for the additional money criticised the one-off funding for failing to address the effects of the new funding system on rural authorities.

Maldon MP John Whittingdale (Con) told Mr Lewis there was “disappointment that the local government finance settlement appears to do little to reduce the rural penalty. In fact it entrenches it for forthcoming years”.

Graham Biggs, chief executive of Sparse, part of the Rural Services Network, told LGC the body was “pleased but disappointed by the additional funding” because it was a one-off amount and still left rural authorities an average of £70m a year worse off than they had expected under the new system.

“The underfunding of rural authorities goes back decades. We had hoped and believed on the basis of the summer consultation [on the business rate retention funding system] that government had accepted that as the needs formula included increased weighting for sparsity, but then the rest of the system comes into play, particularly damping.”

Mr Biggs was also critical of Mr Lewis’ suggestion that the money, worth less than £1,000 in the case of some authorities, could be used to improve efficiency. “We think it is frankly a little insulting to tag it as money to help with efficiencies,” he said.

Treasurers watched the final settlement more closely than in previous years after data reissues in the consultation period sparked fears there would be further changes. Analysis of the latest figures published by the Department for Communities & Local Government show there were some minor changes including a £513,000 increase in the “efficiency support grant” to be paid in 2013-14 to seven councils.

The £8.7m grant in the provisional settlement, to be shared between the seven to ensure their spending power cuts did not exceed 8.8%, has now grown to £9.2m.

DCLG’s breakdown of the spending power calculation in the final settlement also shows concerns about double counting of council tax support as a grant and within the council tax requirement have been addressed. The spending power calculation now includes the council tax requirement minus council tax support grant, a change from the provisional which added both together.

In Parliament, Mr Pickles said the inclusion of public health funding, announced several weeks into the consultation, reduced the spending power cut from 1.7% to 1.3%.

However, Newcastle City Council treasurer Paul Woods said this was a poor comparison because public health funding was ringfenced and reflected payment for a new responsibility. The underlying spending power figure, without public health included, remains 1.7%.

In contrast to the provisional settlement, where some data tables took days to appear on DCLG’s settlement website, documents relating to the finalised settlement were on the website within half an hour of the formal statement announcing publication.

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