Stockton's Infinity Bridge

North East Councils call for fair future funding

24 October 2011

Today, councils in the North East are responding to the Government's proposals to change the way local government is funded. Central to the Government's thinking is the localisation of Business Rates, which are currently collected nationally and then redistributed to local authorities according to a formula which, to an extent, recognises the different needs of different places and communities.

Councils in the North East are concerned about the move to localise Business Rates, as simple localisation would reallocate resources to councils with strong economies - wealthy, business-rich parts of London and the South East. Those losing would be poorer areas, smaller commercial and business areas and rural communities.

The Government has said it is committed to ensuring that no area loses out but there is a real danger that without appropriate action, a postcode lottery in service provision could emerge. The Association has set out its recommendations for action in its submission to Government, highlighted in the Executive Summary.

An Adjournment Debate will be held in Westminster Hall tomorrow (25 October) which will provide a platform for politicians nationally to debate the proposals.

The Association of North East Councils (ANEC) is stressing that councils in the North East need to have sufficient means to address their more complex and demanding local needs. Additional cost pressures in the North East include an ageing population growing faster than the English average and higher levels of deprivation, family poverty and poor health. This means that there is already real pressure on councils' resources at a time when budgets are being reduced.

Councillor Paul Watson, Chair of the Association of North East Councils, said: "We believe that all people of the country should be able to have access to good services no matter who they are or where they live. North East local government is also strongly of the view that any new system should provide genuine incentives and an equal opportunity for all authorities to grow their economies and deliver benefits that can be felt in local areas, as well as the country as a whole. There are some significant and far reaching implications arising from the Government's proposed reforms that could have a fundamental impact on the growth of the economy of the North East and councils' ability to fund essential services.

"We are urging the Government to ensure that sufficient time is taken to consider the potential consequences and to secure a fair deal for all authorities."

Councillor Simon Henig, who Chairs the Association's Task Group on the Review, said: "The Government's consultation proposals to localise Business Rates are focused on financial issues and incentivising local authorities to promote business growth. Whilst North East councils have economic development at the heart of their activities and are committed to creating the right conditions for businesses to grow, there are significant risks and potential negative consequences from directly linking Business Rates income with funding for vital public services."

Commenting on the Adjournment Debate, which has been secured by Julie Elliott MP for Sunderland Central, Councillor Watson said: "We are pleased that this critically important issue for all authorities in the North East is being debated by Ministers and MPs. Since publication of the Government's proposals, ANEC has been actively engaged in discussions with Ministers and Civil Servants, which they have welcomed, to highlight the issues for the North East and to inform future policy."

For further information please contact Bethan Hughes on 0191 261 3917 or 07957 823 864 (mobile); email bethan.hughes@northeastcouncils.gov.uk