Stockton's Infinity Bridge

The Real Cost of the Cuts

04 October 2013

At a joint meeting of ANEC member authority Leaders and North East MPs held earlier today (4 October), politicians discussed the real cost of local government cuts for people and communities and undertook to make robust representation to the Government to highlight their concerns.  As a result of this meeting, those present agreed to a joint communiqué to regional media editors to highlight their collective concerns over the real scale of cuts and additional demands on council services.

Precisely at a time when people are looking to councils during this period of economic difficulty, cuts to local government are on an unprecedented scale and the delivery of vital public services are at a point of being seriously threatened.

Parliamentarians and local authority Leaders have expressed serious concerns about the scale of the reduction to core grant funding for councils nationally to fund vital public services over the next two years.   The Government is proposing an extra £1 billion of cuts to the core grant funding for services - bringing the cash reduction in core funding in 2015/16 to £3.1 billion as opposed to the £2.1 billion or 10% cut announced in the Spending Review.  Added to the £2.4 billion cut in 2014/15 the total cut escalates to £5.5 billion.  What we are facing is a real terms 25% cut in core over the next two years.

Politicians have committed to take every opportunity to highlight evidence and analysis undertaken by ANEC to demonstrate the extent to which people and communities in the North East will be affected by the scale of cuts and the extent to which this area of the country is disproportionately impacted.  These will be on top of the North East having suffered some of the biggest cuts and much higher reductions in spending power than the national average over the last two years.

They will be seeking answers as to why the North East faces a disproportionately high share of this £5.5 billion cut.  In total £351.5 million of cuts are targeted at the North East.   The impact of this is an on average cut of £296 per household compared with an England average cut of around £233 per household. 

At today's discussion, politicians focused on what this means for citizens in localities across the North East, and in particular, for the most vulnerable people in society.   Cuts on the scale being proposed - the highest in living memory - will hit the most deprived communities the hardest.   

There are real concerns, which were reinforced again at today's meeting, about the rising cost pressures in children's services, with the number of looked after children growing by 11% nationally, with higher pressures in the North East.  As a result of the pressures, councils in England have faced a 4% cash increase in their costs, while DCLG and the Department for Education has cut Children's Social Care funding by 30%.    Politicians were of the view that it is difficult to see how a further 25% cut in core funding can be in any way justified or how it can be taken out of Children's Services over the next 2 years.

Politicians heard how deeper cuts in the future will be felt by those in society who most rely on care and support.  Not just children, but the elderly and adults with health and social care needs, which in an area like the North East of England are more complex due to the legacy of our industrial heritage and current health inequalities. 

In giving a commitment to make strong representation to the Government to highlight the concerns of North East politicians, in the interests of their constituents and communities, it was agreed that all opportunities be pursued to achieve the best possible outcomes for the North East.

Council Leaders will strongly be urging the Government to allocate cuts in a simple equal percentage across all councils based on spending power which would be much fairer.  Evidence gathered by ANEC shows that a simple application of an equal percentage cut in spending power could bring significant benefits for the North East - as well as to other areas of the country, such as many London Boroughs and in Metropolitan areas such as the North West and the deprived Shire Counties and Districts also suffering higher cuts as a result of the disproportionate impacts of the current system.

Politicians will also be making the case to Government to reduce the scale of the funding that is being held back or top-sliced by at least £1 billion, much of it without impact on the deficit reduction strategy.   This includes an urgent review of Government's proposals to fund the New Homes Bonus through an additional £680 million, to be held back from local government core funding over the next two years.  The damaging and disproportionate impact of the NHB scheme so far on the North East leads us to call on the Government to limit the scale of the New Homes Bonus given its negative impact on budgets in other key services and to freeze the scheme at its current level.

Ensuring that the cuts that are proposed are made fairly around the country is also critical and politicians will be urging the Government to implement fairer distribution options, which could reduce the cut for the North East by over £90 million a year.

Rail Devolution

At today's meeting, MPs and Local authority Leaders also heard about the importance North East councils attach to having real and meaningful influence over the provision of rail services in the North East alongside investment in infrastructure as being critical to our future economic success.    At the forefront of the debate was the importance of achieving stronger economic outcomes for the North East which could make a significant difference.  Politicians heard how ANEC member authorities were engaging with the Leaders in Manchester, Sheffield and Leeds in developing a Rail North proposition which has been submitted to the Government.

There is currently an active dialogue with DfT over the next two months, leading up to an announcement on rail devolution, expected in November.    The opportunity for MPs and stakeholders to influence that dialogue to ensure that our aspirations for rail investment in the North East and the wider North can be achieved in the future was underlined at today's meeting.