Local government grant funding appears to have been cut by 10.2% for 2011-12, according to figures published by the Department for Communities & Local Government, with some councils taking cuts in the region of 17%.
Formula and specific grants to local authorities have been cut from £31.625bn this year to £28.391bn in 2011-12 – a 10.2% reduction, analysis of DCLG figures suggested. The equivalent figures show a 5.9% cut in grants in 2012-13.
Early examination of individual councils’ allocations suggests Aylesbury Vale DC has been the hardest hit, taking a 17.3% grant cut in the first year while Surrey CC has received the lowest cut of any council at 4.8%. Individual grant changes for every authority in both years can be found in the attached file.
Individual allocations have only been confirmed for the next two years to allow the findings of next year’s local government resource review to feed into the last two years of the settlement.
Addressing the House of Commons, communities secretary Eric Pickles sought to present the settlement in terms of councils’ overall “spending power”.
English councils will face an average 4.4% reduction in spending power in 2011-12 and no council would face a reduction of more than 8.9% in spending power over the next two years, he insisted.
Mr Pickles said: “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%.
“By adopting an intelligent and fair approach to the way funding is allocated we have been able to ensure those parts of the country that are most reliant on central funding continue to get the lion’s share of the taxpayers’ money that is available. Funding fairness underpins this settlement.”
DCLG said substantially more weight would be attached to areas’ needs rather than population and that funding would be distributed in “a fair and progressive” way.
Mr Pickles confirmed that councils have been banded into four different groups based on what percentage of their expenditure is funded by central government grant, as previously revealed by LGC.
Mr Pickles also confirmed a transitional grant worth £85m for 2011-12 and £14m in 2012-13 has been established to “help councils manage issues related to the ending of the Working Neighbourhoods Fund”.
Local Government Association chair, Margaret Eaton (Con), said: “This is the toughest local government finance settlement in living memory. A few councils have seen a reduction in the money they receive from the government of up to 17% in the first year. As a result councils face a total funding shortfall of £6.5bn over the next year.
“We have been clear that the level of spending reduction that councils are going to have to make goes way beyond anything that conventional efficiency drives, such as shared services, can achieve. We have to face the fact that this level of grant reduction will inevitably lead to cuts in services.
A DCLG statement added the settlement had:
- Given more weight to those parts of the country with the highest levels of need. For example, funding per head for residents in Hackney in 2011-12 will be £1043 compared with £125 per head in Wokingham.
- Ensured that the settlement is fair between different parts of the country – north and south, rural and urban, metropolitan and shire. Formula grant is being directed to where it is needed most.
- Sought to insulate those areas of the country most dependant on central government funding by creating four separate grant bands to group councils into, based on the extent to which different councils are reliant on government funding. These bands or ‘floors’ set different limits for their reductions and thereby protect councils against the sharper grant reductions they would otherwise have faced.
Mr Pickles had earlier told councils they must continue to provide “reasonable” services to the public despite the cuts. He said local authorities would have to do “more for less”.
With town hall chiefs braced for cuts next year of around 10%, Mr Pickles insisted that his plans were in line with advice given by the Local Government Association (LGA).
“I have been offered advice by the LGA as to what councils can manage in terms of a reduction in their spending powers and I am well within those figures for the majority of councils,” he told the BBC Radio 4 Today programme.
He said that it was up to councils to cut costs through measures such as sharing chief executives and back office services to ensure that frontline services were protected.
“I am expecting local authorities to provide more for less, I am expecting them to be able to provide a reasonable level of service,” he said.
“Local authorities shouldn’t have some kind of alibi in feeling that these have been imposed from the centre and therefore they have got to pass every single cut on to the frontline.”
Mr Pickles is also publishing the government’s Localism Bill to give groups in local communities greater scope to take control of some council services in line with David Cameron’s vision of the “Big Society”.
“This is about a new constitutional arrangement, it is about shifting power down to localities,” he said.