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Graham Chapman: Government must not bail out failing counties

Graham Chapman
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The expected announcement of the local government financial settlement yesterday failed to materialise. We might ask why.

My strong suspicion is the government is panicking in light of the financial crisis at Northamptonshire CC. Moreover, ministers will wilt under pressure from the lobbying of county councils to resurrect the unfair transition grant scheme. I may be putting two and two together and making five but circumstantial evidence would lead one to believe that this is a reasonable conclusion.

Two years ago, the transition grant scheme was used to hand out an extra £300m in funding, particularly to more affluent councils in the south of the country which over the austerity years have escaped serious funding cuts. Around 80% of this money went to councils in Conservative controlled places, with Surrey and Hampshire being the biggest winners. Seventy percent went to county councils. In contrast, metropolitan districts received less than 2% of the money available.

At the same time, places like Nottingham, Knowsley and Liverpool, which have been amongst the hardest hit by severe funding cuts from central government, received no additional money.

Despite repeated Freedom of Information requests from myself, the government is still refusing to give detailed information about how decisions to distribute transition grant funding were made, which of course only serves to strengthen suspicion that was simply a mechanism to channel funding to selected councils on the basis of their political colour.

This all comes following the revelation last week that Northamptonshire has become the first council in recent times to impose emergency spending controls through the issue of a section 114 notice. A number of other county councils are believed to be close to following in Northamptonshire’s footsteps.

But perhaps we shouldn’t be too surprised at this turn of events. After all, it was only as recently as last year that a Local Government Association peer review of Northamptonshire suggested “the council is banking on the ‘hope’ that it will be bailed out by the government in 2019-20, because other councils may also find themselves in a similar position”.

If my suspicions materialise, then it would be a real travesty. Councils which mismanaged their finances by not increasing council tax enough and outsourcing and therefore losing flexibility to manage overheads could be rewarded for incompetence through another round of transition grant funding. Northamptonshire, for example, has not taken advantage of its ability to increase its council tax base. At the same time, it has outsourced huge areas of service delivery.

To add insult to injury, these same authorities more often than not could also be ones which have suffered least amongst all major authorities from loss of spending power.

Then again, I may be wrong and perhaps all the procrastination over the settlement is caused by a discussion about whether to allow councils retrospectively to charge the council tax they failed to charge since 2013.

But I doubt it.

Graham Chapman (Lab), deputy leader, Nottingham City Council 


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Readers' comments (1)

  • Transition Grant didn't happen in a vacuum; the Government had changed its previous pattern of RSG cuts to take account of council tax (and not just the "base" as was the case in the good old days of SSAs and FSS). That meant a steepened trajectory to the cuts for County Councils (in the main) and a slightly more gentle downward slope for other classes of authority. Transition Grant was therefore focused on counties, as a belated for of "damping". It doesn't help that DCLG didn't release their detailed calculations, which might have made these things a little clearer.

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