Fairness and an equitable settlement at the centre of ANEC's response to funding proposals

16 January 2014

North East councils have responded to a request from the Government seeking views on proposals for funding councils in 2014/15. The key issues for authorities in the North East relate to the principle of fairness and the inequitable re-distributional impacts of the funding proposals, the higher than average reductions in spending power in the North East and the effect of these for the wider economy and our ability to create the conditions for businesses to thrive.  We make the point that in order to achieve growth, councils need to be in a position to continue the good work on creating the conditions for businesses to thrive.  Without sufficient resources this become much more difficult.  

11 out of 12 councils in the North East will have higher than the English average reductions in spending power.  People in the North East will see the spending power on services cut by 5% more than the England average.  The cut in £/per dwelling will be 4.5 times the cut in the South East and the percentage cut is almost 4 times that in the South East.

The cumulative impact of such spending power reductions is a loss of over £109 million which equates to a reduction per dwelling of £91.93 for the North East.  The English average reduction in spending power is 3.1%, equating to £71.58 per dwelling.  Contrasted with the North East, the funding settlement for 2014/15 represents a gain for more affluent authorities elsewhere in the country, which ANEC highlights by drawing comparisons between areas such as Newcastle and Darlington with Wokingham.  

The implications of a further 7.2% cut in spending power over the next two years for local services at a time of increasing cost pressures are issues we raise in our submission to the Government.  We highlight the higher and more complex needs of people and communities in the North East and illustrate this through graphs showing increases in the numbers and cost pressures in Looked After Children and in relation to adult social care.  We draw attention to the fact that in terms of services provided per 100,000 of the population in the North East is well above the national average – it is 29% above the national average for home care, 41% for day care and 100% for short term residential care.

Commenting on the funding proposals, Cllr Paul Watson, Chair of ANEC said, ‘We have consistently raised with Government the issue of fairness and equity in funding decisions and this continues to be a key issue for us.  This consultation is an important and timely opportunity for us to highlight key issues of concern to local authorities in the North East, particularly the erosion of a needs based system of funding councils towards one based on incentives that will have disproportionate and negative impacts on the North East where there are higher and more complex needs and levels of deprivation.  We draw attention to the implications of a funding settlement that will result in higher than the English average reductions in spending power in local authority areas across the North East whilst many more affluent areas of the country will benefit from increases in spending power.  We believe there are options and alternative approaches that Government can take to correct the flaws in the system and are offering our support to help Government achieve its stated aim of a funding settlement that is fair to North and South and to limit as far as possible the impact of reductions in spending on the most vulnerable in society’.

Read the full response here