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Nick Rushton: All councils must maintain pressure for fair funding

Nick Rushton
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This year’s local government finance settlement was delivered amidst events in Northamptonshire and subsequent headlines on the strains facing other councils’ budgets.

On the eve of the settlement, the deputy leader of Nottingham City Council wrote for LGC predicting a politically motivated ‘bail out’ for county councils.

I know Cllr Chapman and my council and his enjoy good relations but on this occasion his main prediction proved incorrect. The County Councils Network’s measured and well-coordinated campaign delivered new, additional funding for councils of all types.

The £166m that CCN and county MPs secured doesn’t bridge the funding gap facing the sector. However, councils will at least have some additional resource than otherwise would have been the case, including £1m for Cllr Chapman’s own council.

When comparisons between types of authority are made, it is useful to recall recent history.

In 2015 changes to government grants, on which there had been no consultation, resulted in millions of pounds of funding being redistributed from county authorities to metropolitan authorities and London boroughs. This is why counties campaigned so vociferously at the time.

Despite the introduction of transitional funding, which reversed just 40% of these reductions, county authorities are living with deeper reductions in core grants.

Furthermore, Cllr Chapman’s claim counties have ‘escaped serious funding cuts’ does not stand up to scrutiny.

By 2020 counties will see their revenue support grant reduce by 94%, and settlement funding assessment (core government grants and retained business rates) reduce by 44%: higher than all other upper-tier types. This will leave counties receiving even lower levels of government support than they already did, with per-head funding at just £161 by the end of the decade, compared to an England average of £266 and £459 in London.

In addressing this situation, the context for counties is significantly different, not least a backdrop of significant demand-led pressures that are more acute then elsewhere. The pressures, by 2021, will leave a funding gap of £2.54bn.

Unlike unitary or district councils, county councils have not benefited from the new homes bonus. Indeed, the National Audit Office has shown that in fact two-tier counties were £25m worse off during the last Parliament, while unitary authorities were £44m better off, and district authorities £250m. That cannot be allowed to continue.

Neither can drawing down reserves go on forever. Nor can asking council taxpayers in county shires to continue to pay more for fewer services, all the while subsidising services in other parts of the country.

Arguments over whether a certain type of council is better financially managed compared to another will continue but, irrespective of type, I believe the councils in most difficulty will be those who have not sought genuinely to transform and have failed to plan beyond a one-year horizon.

For now, we need to focus on the issue of underfunding, for the sector as a whole and for county councils in particular. We must work together with the rest of local government to ensure the government does not fudge the fair funding review, and ensure it delivers a fairer, more transparent system that funds councils on future and present needs. As CCN’s chairman last week said, the sector must redouble its efforts in securing the £26bn in business rates generated locally to meet the unmet demands, particularly in adults and children’s care. Without those outcomes, the future is bleak.

Nick Rushton (Con), leader, Leicestershire CC, and CCN finance spokesman

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