Angel of the North

North East Councils call for a fairer funding settlement

15 January 2015

In response to the Government’s consultation on the Local Government Finance Settlement, the Association of North East Councils has raised a number of critical issues for the future financial sustainability of councils in this area and across the country.

ANEC member authorities are deeply concerned about the real cost of the Government’s stated 1.8% reduction in the 2015/16 settlement.  In reality, the grant cut for the North East would mean a cash budget reduction of around £190 m (8%).  There is no question that this level of reduction will have dramatic and damaging consequences for councils’ ability to fund vital public services, such as children’s and adult social care, that citizens and communities value and expect their local council to deliver.

Our submission to the Government highlights, as an example, the demand pressures in Children’s Services arising from significant increases in the numbers of Looked After Children over the last 5 years.  The North East has seen a 30% increase in numbers against a 40% cut in funding.  Government funding for core Children’s Services is estimated to be cut by around 50% (£2bn) by 2015/16; this includes a proposed -17% (£0.5bn) cut in 2015/16.

We have also highlighted how the overall 40% central Government grant reduction over the last 5 years has disproportionately hardest those areas with the highest need the hardest.  Our analysis demonstrates how the current distribution of cuts is unfair, with figures showing that the 10% most deprived areas face a -6/7% bigger cut than the 10% least deprived areas.

ANEC is calling for a fairer approach to the allocation of central Government funding across the country and is pressing for a commitment to be given to a needs-based system of funding that recognises and protects those areas of the country with higher levels of deprivation and demand pressures.

Cllr Paul Watson, Chair of ANEC said “The current funding system is broken and urgent reforms are needed to deliver a funding system that is fair, transparent and sustainable.  If the system is left unchanged, a combination of rising demand and reducing resources will see a significant erosion of services that citizens and communities value and expect their council to be able to deliver.  There is now a weight of evidence in the public domain highlighting concerns about the impact of the cuts and the future sustainability of councils, including independent research and analysis undertaken by the National Audit Office, the Local Government Association, ANEC and other professional bodies, which cannot be ignored”.