Stockton's Infinity Bridge

North East councils make case for fairness in Government grant decisions

18 January 2013

Councils across the North East have responded together to highlight the impacts of the provisional local government grant settlement for all authorities in the North East.

Meeting with the Minister, Brandon Lewis MP, Association of North East Councils' Chair and Vice Chair, Cllr Paul Watson and Cllr Simon Henig, emphasised that local government in the North East is keen to be part of the solution in addressing the challenging fiscal and economic circumstances affecting this area of the country.  But in order for councils to deliver the quality and breadth of services the public expect of councils - and to support business growth - they need to be adequately resourced. 

The cross-party representation by ANEC highlights a number of ways in which the mechanisms and design of the formulae used for allocating resources have an unfair distributional impact on councils in areas of higher deprivation - primarily in the North, whilst benefitting more affluent councils in areas of the South. 

Fairness is a key issue. Whilst the Government has consistently made the point that North East councils receive more money than other councils and therefore have to take their fair share of the cuts, ANEC has provided analysis between councils in the North East with those in the South (for example, Durham compared to Surrey) which show that the needs of the communities that councils serve in the North East differ dramatically from other areas. 

We make the point that we have more older people requiring essential council services, who are not able to privately fund their care; the council tax base is lower with significantly more Band A properties which generate significantly less income and demand pressures increasing in children's services. 

Based on ANEC's analysis, Surrey will receive £173 more protection against grant loss than Durham and will receive higher specific grants.  The difference in spending power in 2013/14 between the two areas, despite the differences in need, amounts to only £112.

Similarly, the design of the Government's New Homes Bonus scheme significantly disadvantages the North East. Due to how it works, North East councils will pay in more than they receive. The outcome is advantageous to wealthier areas with high council tax bases and disadvantageous to more deprived low council tax base authorities. Moreover, paying into a central pot to support the scheme removes vital money away from core revenue funding that is currently used to pay for much needed services such as social care, roads and support to business to help grow the economy.

The cumulative impact of decisions on allocation of resources between 2010/11 and 2014/15 and the distributional impact this has across different areas of the country shows that the North East, North West and Yorkshire and Humber will have over £1 billion of funding re-distributed to the South East as a result of funding decisions such as New Homes Bonus and reductions to resource equalisation.

Commenting on the provisional grant settlement, Cllr Paul Watson, Chair of ANEC said, "We hope Ministers will give careful consideration to the issues and concerns ANEC has highlighted in its response to ensure that we get a fair settlement, which is what Government has stated it is committed to do - fair to north and south, rural and urban, shire and Metropolitan England."

"In highlighting the distributional impacts and consequences of policies such as New Homes Bonus and damping protection, as well as other critical issues for North East authorities, we are urging the Government to take full account of the impacts across all parts of the country.  The examples we have provided that show wide disparities between councils in the North East and those in the South speak for themselves."

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