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Minister challenged over fairness of settlement

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Local government minister Kris Hopkins has been challenged over the fairness of the council finance settlement, as analysis reveals the cuts it sets out will hit deprived areas the hardest.

In a telephone conference this week, Alan Gay, deputy chief executive of Leeds City Council, told the minister that Leeds lagged behind wealthier councils in its “spending power”, a government measure of councils’ funding.

“You describe the settlement as fair to all,” Mr Gay said. “Wokingham is one of the least deprived councils in the country [but] it has a higher spending power than Leeds…I find it hard to understand.”

Figures from the Department for Communities & Local Government, which ran the conference, show Leeds has a “spending power” of £1,841 per dwelling for 2015-16, compared with Wokingham BC’s £1,932.

In response, Mr Hopkins said: “I’m sure you can find anomalies in any formula you want to put out there. The most deprived authorities are receiving substantially more money. It’s something we’ve tried to maintain.”

“Whichever government was in power would never find an ideal formula,” he added. “The key thing for me is…rather than just being dependent on grant, we’ve moved away to another way of looking at local authorities…it’s about you being able to determine some of the resources.”

The leaders of Bury MBC, Leicestershire CC and Plymouth City Council also questioned the fairness of their councils’ settlements compared with those of other authorities.

It comes as figures shared exclusively with LGC by the Association of North East Councils show the spending cuts for 2015-16 announced before Christmas will have a disproportionate impact on deprived areas. Using the government’s measure of spending power, it shows the most deprived 10% of areas face a 5.2% cut while the most affluent tenth will see their funding rise by 1.5%.  

In response to the figures Mr Hopkins said: “We have ensured that councils facing the highest demand for services continue to receive more funding from central government and have higher spending power than less deprived authorities.

For the most deprived authorities the average spending power per dwelling is nearly £2775 which is around 40% more than for the least deprived areas.

For example Middlesbrough, one of the most deprived areas,  has a spending power per household of £2,441 which is £871 more than the £1,570 per household in Windsor and Maidenhead at the opposite end of the scale.”

Also during the telephone conference, Mr Hopkins hinted that he may rethink planned cuts to the Local Welfare Provision Grant, which funds emergency support such as crisis loans for vulnerable residents.

When he laid the finance settlement before Parliament last month, Mr Hopkins told MPs he would “carefully consider” calls for extra government funding for the grant. During the phone conference he said: “I specifically put that note into the statement. We’ve been wanting people to make representations, we’ve wanted to understand the consequences.”

A snapshot poll of the 80 councils taking part in the phone call revealed 55% planned to freeze council tax in 2015-16 and 45% intended to raise it. Another found 12% expected to increase their authority’s reserves next year and 88% to reduce them.

 

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