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Councils' revenue cut 5% higher than chancellor predicts

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More than half a billion of “new” local government income unveiled in the spending round will be funded by cuts to council grants in 2015-16, it has emerged.

The £335m of “new burdens” money announced for councils delivering the Dilnot reforms to social care, a £100m “transformation fund” for councils willing to share services and the £30m ‘fire transformation fund’ will all come out of funding previously announced for 2015-16.

The £188m Independent Living Fund, for which councils are taking responsibility from the Department for Work & Pensions, is also thought to be involved. There are also questions over whether part of the £200m funding for troubled families may result in a further reduction to council grants.

At the time of the spending round, the Department for Communities & Local Government heralded “a new £100m transformation fund [which] will give councils the impetus to implement efficiencies and another £30m will encourage greater collaboration across emergency services”.

However, consultation documents published by the department last week revealed that councils’ funding allocation was much smaller in 2015-16 than expected and, following enquiries by the LGA, it has emerged that councils funding will be top-sliced in order to finance the “new” funds.

In a briefing to members, the LGA said: “Some of these were announced in the spending round and presented as new money. It now appears that they will come from local government DEL [departmental expenditure limit] and that mainstream funding will be cut as a result.”

In the spending round documents the government said local government DEL would fall by £2.1bn from £25.6bn in 2014-15 to £23.5bn in 2015-16. However, in the consultation documents published last week DCLG indicated that the amount of funding to be handed to local government had shrunk in both years. In 2014-15 it will be £24.6bn shrinking to £21,7bn in 2015-16, a cut of £2.9bn.

Alongside a number of other holdbacks, including the additonal £95m to be top-sliced for safety net payments, the LGA has calculated that the repackaging of local government budgets leaves authorities facing a 15% cut in the 2015-16 spending round instead of the 10% which the chancellor announced.

The LGA has also queried the provenance of the £200m funding for troubled families, which is paid for by a number of departments including DCLG, but received no final answers. The LGA said: “DCLG say that there are also some funds which have yet to bve allocated, including a contribution to the troubled families programme in addition to funds from other departments.”

However, DCLG has accused the LGA of being “disingenuous” in its claims arguing that the total department expenditure limit for local government remained unchanged.

“To help tackle the deficit left by the last administration, in the recent spending round, the coalition government set out a saving of 2.3% for 2015-16 in overall local government spending, including funding from central government, business rates and council tax income. This change is balanced with a progressive package of measures which create a real opportunity to transform local services and help deliver better outcomes for less.

“It is disingenuous of the LGA to suggest there are further budget reductions since the total amounts allocated to local authorities have not changed since the spending round.”

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Readers' comments (4)

  • individual local authoitity figures also exist on DCLG website, but were not promoted in consulation announcement

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  • http://www.local.odpm.gov.uk/finance/1415/sumcon/index.htm

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  • The headline to this article should read:
    "Councils' revenue cut 50% higher than chancellor predicts"
    A 15% cut is 50% higher - not 5% higher - than a 10% cut.

    But, you have to hand it to Eric. He goes all popular on parking fees and parking on double yellows, getting big media coverage and populist brownie points. Meanwhile, no general media coverage of additional £95m top-slicing nor additional cuts in local government grant to fund all his positive announcements. Surely not ' a good day to get out bad news'?

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  • Roger

    The closer 2015 gets, the more those with any inkling of what the local government landscape will like must be asking themselves, what's the point? If doing things differently, translate into, set a budget, award a contract to whomever cons you into believing that they can do it cheaper and better, then sit back until the next election, really, what is the point of being an elected member?

    Most of the time, elected members want to improve, enhance and increase what their local taxpayers receive from their council.. If services remain in house, there's at least the opportunity to adjust the way you do things, or even 'stretch' the goodwill of staff, as we often do already. Is there anybody out there, if they were being honest, who would tell me that they can not tell the difference between the flexibility of the in house staff and that displayed by a contractor? If so, please, please tell me how you did it - I still probably won't believe you!

    A miserable and cynical forecast, from a stale and jaded councillor whose been at it too long? Maybe, but that doesn't means its not true!

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