Local authorities prepare for cuts of up to eight per cent next year
Lauren Higgs
Thursday, December 8, 2011
Councils are to be hit with spending cuts of up to eight per cent next year, under plans set out in the provisional local government finance settlement.
Grants paid from central government to local councils to fund services including early years provision and children’s social care will total £27bn next year, down from £29bn this year.
The average cut across local authorities is likely to stand at three per cent, or £75 per household, slightly less than this year when the average slashed from local budgets stood at four per cent.
Overall, the money councils receive from central government is being cut by 28 per cent over the next four years.
Despite this, the total early intervention grant given to councils to fund children’s services will rise from £2,270m this year to £2,412m in 2012/13. The sum is not ring-fenced, so councils are free to spend the cash as they see fit.
This year, the government has changed the way it calculates the settlement, in a bid to lessen the impact on the poorest areas.
Local government minister Bob Neill said his department had taken action to make sure that no council will see their overall spending power fall by more than 8.8 per cent.
"To fund this, I have transferred £20m of my department’s budget to local government for 2012/13," he said.
"Councils will have an average spending power of £2,186 per household at their disposal in 2012/13. Reflecting the fairness of the settlement, the average spending power per household in Hackney will be £3,050 compared with £1,537 in Windsor and Maidenhead."
The 2010 spending review announced the total amount of funding that all local authorities will receive from central government between 2011 and 2015. The annual local government finance settlement sets out yearly allocations within this total amount.
The government is now consulting councils on the detail of this year’s settlement until 16 January 2012.
A separate consultation on how local authority funding should be reduced to account for the expansion of academies - and corresponding reduction in local authority maintained schools - is also underway.
Councils' individual settlements are likely to change once the Department for Education has decided how it intends to allocate this cash.
David Simmonds, chairman of the Local Government Association's children and young people board, said the proposal to take cash from local authorities to fund services in academies risks leaving councils out of pocket.
"We have made it clear that school choice is something that councils support, but it cannot be fair for local taxpayers to subsidise the roll out of the academies programme," he said.
Education Secretary Michael Gove argued that the plans take account of "the need to ensure that both academies and local authorities are funded fairly for the pupils they provide services for and the responsibilities which they hold".