Local Government Funding Cuts

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2013 Local Government Service Group Conference
19 February 2013
Carried as Amended

Conference is alarmed that many Councils have faced unprecedented reductions in Government grants since the 2010 Comprehensive Spending Review. Since then, the position has deteriorated for local government with many councils now forecasting that central Government support over the six year period 2011-2017 will see reductions in excess of £100m.

The December 2012 Autumn Statement reported that the Government believes that public sector expenditure reductions will need to continue until at least 2017/18 which is a further three years of funding reductions beyond the current comprehensive review period to March 2015.

Drastic cuts to Formula Grants, a major source of government funding to councils, worth almost £1.2bn this year. This is much worse than the £0.2bn outlined in the Spending Review 2010. Comparing 2012/13 Formula Grant with next year’s cash equivalent, reveals that the cut averages out at 8.4%.

The government’s 2010 Spending Review already meant that for every £100 in Formula Grant that was paid to councils in 2010/11 just £73.60 would be paid in 2013/14. The recent settlement announced by Eric Pickles now reduces that to just £68.60.

Local Government already faces a reduction of 28 per cent in Formula Grant by 2014/15. Spending Review 2010 cut Formula Grant – the main grant to local authorities – by £3bn; £1.6bn; £0.2bn and £1.3bn in the years 2011/12 to 2014/15.” It is estimated that Government funding to local government will have reduced by a further 40% by 2017/18.

In the Northern Region, the public sector provides significant employment with 1 in 3 people directly employed within it. The latest public sector employment figures from the Office of National Statistics (ONS) show that two years into the Coalition government (Quarter 2 2010 and Quarter 1 2012) the North East has already lost 27,000 public sector workers. This situation, in an area with an employment rate of over 9.1%, the highest in the country, means that families face increasing difficulties supporting themselves and there has been an increasing reliance on food banks to supply the basics that families need to survive.

And women in the North East have a higher than average dependency on public sector employment. Nationally 40% of working women are employed in the sector compared to only 11% of men. In the North East nearly half of women who are working are employed in the public sector (46%) and two in three of public sector jobs are done by women. Women in the North East are therefore going to be even harder hit than men by the cuts in the public sector in terms of jobs, pay freezes and pensions.

Conference, the Northern Region is concerned that cuts in funding to Local Government is also having a negative impact through the growing regional differences in the allocation of public funds. The way that public funds are being redistributed in England is adding to deprivation, widening social and regional disadvantage and creating social division.

Conference believes that these, and further, reductions in grants have not been or will be equitable, resulting in huge regional differences in the allocation of public funding.

Conference calls on the Local Government Service Group to

1)Campaign to change the funding formula to ensure equity in the grant allocation.

2)Develop a clear alternative strategy that demonstrates the need for investment in the public sector as a means to generate jobs and growth.