Local government finance settlement spells cuts of up to eight per cent

Communities Secretary Eric Pickles confirmed that council budgets will be cut by an average 1.7 per cent in 2013/14, as central government attempts to redefine its relationship with local authorities by changing the way it distributes grants.

Hilary Benn, Labour's shadow communities secretary accused the government of  “unfairly hitting the poorest areas hardest”, and questioned why deprived cities such as Liverpool were facing a 7.7 per cent cut in revenue over two years, while more prosperous areas such as West Oxfordshire will receive an increase of 1.1 per cent.

“Let’s be clear what is being lost due to his unfair cuts: libraries, sports centres, Sure Start centres, places at women’s refuges,” Benn said.

A group of seven council leaders reacted angrily to the settlement, demanding an urgent meeting with Communities Secretary Eric Pickles in an open letter that warns of a “looming financial crisis in the nation’s largest cities”.

The signatories from areas including Newcastle and Birmingham said the cuts would leave councils unable to provide public services. “There will be no money for anything but social care and refuse collection later in this decade,” the letter said.

Newcastle, which recently announced intentions to close its entire play service, is facing an estimated £90m funding gap over the three years to 2016. And Birmingham faces an estimated shortfall of £600m in funding to maintain local services until 2017.

But Pickles said the deal represented “fair funding”. “Councils must keep doing their bit to tackle the inherited budget deficit because they account for a quarter of all public spending and still get through over £114 billion of taxpayers’ money each year,” he said.

“Councils that put their thinking caps on now can save precious taxpayer pennies next year by cutting out waste and transforming frontline services that vulnerable people rely on.”

Alongside the settlement, Pickles published a guide of 50 ways councils could save money, including stopping translating documents into foreign languages and selling more services.