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Local government is a 'big winner' financially, says Sunak

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Rishi Sunak has insisted central funding for local government is increasing more rapidly than inflation, urging councils to “judge [the government] on what’s going on” following a more generous Budget than was expected.

The local government minister was interviewed by LGC at the County Councils Network conference in Surrey on Tuesday.

Mr Sunak described Philip Hammond’s Budget as a “pretty serious statement of intent” with regards to the lifting of austerity. He said £1bn of extra funding “adds up in my book to a pretty significant cash injection into local government”, meaning it was “hard to argue that local government wasn’t really one of the biggest winners of the recent few months”.

He continued: “Local government has seen its resources go up faster than inflation – they’re going up in real terms. When you add in core spending power, it’s 2.5% or so this year, and on top of that there’s business rates retention, which local government keeps.”

Mr Sunak denied he had told his Richmond constituency’s top-tier authority North Yorkshire CC that its funding would be boosted by the forthcoming fair funding review. His comments in an August council meeting that the new funding formula would be a “huge improvement of where we are today” for the county were interpreted by the Northern Echo as indicating an “extra funding pledged” to the authority.

However, he told LGC: “I wasn’t talking about any individual council’s fortunes. No one would know what those are – the formula isn’t finalised yet.”

He said the new formula for distributing funding between councils would be “an improvement in terms of its accuracy, simplicity and fairness” when compared to the current version which is based on “15 different formulas and over 120 different indicators and data that’s over a decade old”. The new version will be “much more responsive to what’s going on on the ground”.

The minister had earlier told the CCN conference a further paper on the fair funding review would be published this year. This would “narrow down the options”, but it would not be until “late spring” 2019, around the likely time of the spending review’s publication, that councils could expect an indication of what funding they may actually receive as a result of the formula.

Asked whether top-tier councils’ calls for extra resources were undermined by widespread disparities in children’s services spend and little correlation between spend and outcomes, Mr Sunak said: “There’s probably more variation in children’s than almost any other service area.”

He added: “It’s definitely incumbent on all local government to ensure that every penny they spend is wisely spent.”

LGC also asked Mr Sunak if Westminster turbulence made it likely that he would not be in his current job long enough to see his financial reforms through.

“The degree of turbulence is always overestimated in newspapers compared to how it is in real life,” he said. “We’re all getting on with the job. I’m looking forward to doing that for as long as I’m lucky enough to have that role.”

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Readers' comments (3)

  • None of which takes into account how LA's have already had their reserves significantly used up, and the damaging effects of losing staff with critical levels and depth of expertise and local knowledge, as well as key services no longer commissioned out or delivered by us at all (what price libraries? and SEND cuts across the country?) has hollowed us out a sorganisations and dented public confidence.

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  • Core Spending Power may be going up, but the element that is mainly responsible for this is Council Tax Base and Tax Rate growth. Without these increases, the Core Spending Power figures would look very different.

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  • our inflation is not the retail price index, pay was put up by more in the national agreement, costs of items such as waste disposal is rising quickly, county lines impact on childrens services, etc etc etc, our resources would need to go up 5% more than rpi for 5 years to get close to matching our cost pressures

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