Wednesday 22 January 2014

Further funding cuts unsustainable London Councils tell Government

As Brent Council puts the finishing touches to its budget and Brighton moves towards a referendum on increasing Council Tax to preserve Adult Social Care, London Councils issued the following press release which highlights the unsustainability of further funding cuts.

London Councils has issued a stark warning in its submission to the government’s consultation on the Local Government Finance Settlement 2014/15 that year-on-year cuts to funding are unsustainable.

The response, submitted on Wednesday, raises significant concerns about the long-term sustainability of the local government finance system in London as well as the lack of transparency and coherence in the government’s proposals.

Chair of London Councils, Mayor Jules Pipe, said:
There is nothing to reassure Londoners in this settlement. London is facing the double whammy of disproportionately high cuts along with dramatic increases in demand and costs on multiple levels. By the end of 2015/16 we will have seen a reduction of 44 per cent in central government funding and we have worked flat out to protect and, where possible, improve local services.

London boroughs are now being required to shoulder a disproportionately large share of the overall reduction to local government compared to elsewhere in the country and the government must explain to Londoners why this is the case.
Without significant changes to the way cuts are applied many boroughs will quickly reach an unsustainable position, and that will affect local services.

The response highlights a number of specific concerns. Using the government’s concept of Spending Power per dwelling, it shows that London local government is shouldering a significant part of the government’s deficit reduction programme.

Between 2010/11 and 2015/16 the average reduction in spending power per dwelling in England is £300. In London, the reduction per dwelling was £544.00. This is 81 per cent higher than the national average. In 2014/15 and 2015/16 alone, London will face an overall reduction in spending power per dwelling of £294 compared to the England average of £117. (1)

In addition, unlike councils across the rest of England, London boroughs will lose a proportion of the New Homes Bonus, worth £70 million, which funds the additional costs that fall on local services when new homes are built in a borough.

Mayor Pipe added:
For the past two years the settlement has been announced extremely late. While there may be a number of reasons for this, and it may be helpful for central government, it does little to provide hard-pressed boroughs with the certainty and assurance needed to set budgets and council tax for the following financial year.
View the consultation response submission

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