Spinning the local government settlement

By Sarah Hayward / @Sarah_Hayward

Local government finance is complicated. And it’s one of the easiest accusations in the world to levy at politicians that they are spinning something. But there are some very clear issues with the local government settlement that hide the true level of cuts that councils are facing.

Rightly or wrongly the current set up means that councils are dependent on central government to be able to carry out the functions and services they deliver for local communities. Some more than others but dependent nonetheless. You can make all sorts of arguments about business rates, council tax and the housing revenue account and that’s before you get in to discussions about wholesale reform of local tax systems. But we are where we are and from next year many councils will be forced to make very substantial cuts to local services because this government has chosen councils to be one of the hardest hit areas of the public sector.

Ranging from a 0.25% increase (yes increase) in funds to 8.9% cuts, these figures could, to the uninitiated seem less horrific than some of the figures being mooted for cuts. But those figures mask the true level of money taken out of councils by the government.

Revenue Spending Power is the new measure used by the government. It includes sources of income not just from central government including council tax take. And crucially assumes no change to council tax. Including an unchanged amount for council tax skews the percentage cut to the overall revenue position favourably for the government because the percentage cut is no longer only worked out on money received from government it includes an unchanged sizeable chunk of cash that councils raise locally.

My ever even-tempered husband pointed out that it wasn’t unreasonable to include it to give a more holistic picture (I’m trying to be fair see), which is true. So long as they continue to include it should they ever get to the position of increasing funding again – because as it masks the size of the cut it would also reduce the size of the increase in percentage terms. I’m not holding my breath for either an increase in funding or more transparency any time soon.

NHS Funding the tables include a relatively small amount (but still around 1% of Camden’s total ‘revenue spending power’) that is intended for local authorities to be able to carry out functions previously delivered by the soon to be defunct PCTs. Except god knows why it’s included in the tables for the Local Government Settlement because this money isn’t actually coming to councils – it will be funnelled by the NHS with no guarantees that it will actually come, lock stock, to councils.

Transition grant as reported by the Telegraph is not actually a diversion of cash from rich to poorer areas as the piece claims. Even with the transition grant London’s boroughs with the highest levels of deprivation are hit hardest, losing 8.9% of their ‘revenue spending power’, while Richmond, that doesn’t get transition funding, and is one of the wealthiest boroughs loses on 0.61% of it’s ‘revenue spending power’. I’m not sure in what world that counts as diverting money from rich to poor areas – but never underestimate the capacity of politicians to believe their own propaganda.

Protecting Sure Start funding Cathy Newman on Channel 4′s fact check has done the work on Sure Start for me. Barnet’s budget proposals include a 30% cut for the service. There will be more of this to come.

Pupil Premium and real terms increase in school funding are both bunkum. They’ve protected the cash level of per pupil funding (up to 16 – still no news on 6th form funding), and whether you use CPI or RPI as your measure the impact on Camden of the pupil premium is entirely wiped out by inflation because per pupil funding is frozen. Camden stands to gain more ‘pupil premium’ money than most local authorities because of the number of Free School Meals kids taught in our schools. Despite this our schools will be more poorly funded in real terms.

The budget/CSR/Settlement are progressive/fair and we’re all in this together – make your own mind up, but this is a littany of further broken promises by the government, a financial plan that effectively moves money from areas of high deprivation to well off areas and in no sense can fit a claim that we’re all in this together. Camden’s residents will lose far more services they currently receive than those in Barnet or Richmond and because of the levels of deprivation here our residents are often far more reliant on these services.

Where Labour is in government, in Town Halls up and down the country, we’re in for a rough few years.