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The Local Government settlement has protected the poorest communities

by Eric Pickles

Eric Pickles cheerful The catastrophic levels of public debt have meant tough decisions about reining in spending across every part of the public sector – and councils are no exception.  This week, I told them how much grant they’d be getting over the next two years.  In the run up to my announcement, there had been a lot of unhelpful speculation and scaremongering.

But here are the facts.  Despite the toughest economic circumstances in recent memory, the Government has kept average reductions in spending power down at just 4.4%.  At the same time, we’ve protected the most vulnerable and poorest communities from the sharpest grant reductions.  And we’ve provided enough money so that every council in England can freeze council tax next year without hitting local services.

We’ve done all this by making important changes to the way that councils are funded: paying much more attention to the levels of need in different councils.   We’ve grouped councils together so that councils which are most dependent on government funding were insulated from the sharpest falls.  And the poorest areas, which are much more reliant on central government funding, continue to get the lion’s share of the resources.  People in Hackney, for example, will get £1043 next year, compared with people in Wokingham who will only receive £125 per each.  So any claims that the North has been hit harder than the South are disingenuous – in fact, we’ve gone out of our way to support them by creating a much fairer and more progressive way of sharing the money out.

Before the settlement, a lot of the critics were saying that the reductions were going to be front-loaded and hit councils hardest in the first couple of years.  (Leave aside for a minute the fact that they came up with that without having  any numbers.)  Again, that’s proved to be empty speculation.  What we’ve done is looked at the overall spending power that councils have – including, for example, the money they raise through council tax or NHS support for health and social care.  This is what the Local Government Association asked for – because it’s a much better reflection of what councils actually have in their pockets than just grants.  I’ve provided almost £100 million over the next two years so that no council is losing more than 8.9 % of their spending power – and many are well below that.

This is a long way from the apocalyptic predictions that some people were making.  And this has to be put in the context of this week’s Localism Bill – the most radical shift in power from central to local government in a generation.  Councils will finally have the power, the authority, and the flexibility to respond to local challenges rather than being hamstrung by Ministers.

But at the moment, there’s a huge divide between those who are ready to step up to the plate and those who aren’t.  The most horrifying example is perhaps in Newham.  It was  reported this week that they spent £2000 a pop on designer lights as part of new £111 million luxury offices.  It would be an absolute joke if they weren’t also considering cutting 1600 front line staff.  This is exactly the sort of council excess and waste that has to be a thing of the past.

On the other hand, there are councils who are taking a more thoughtful approach.  Senior staff are taking pay cuts in Pendle and elsewhere; Lancashire is joining forces with BT to deliver back office services like pay and HR, saving the council millions of pounds; and Northamptonshire and Cambridgeshire are similarly teaming up in a move which will save £25 million over 10 years. These are exactly the sort of steps which will help councils focus on the frontline services people need – and I hope more will follow suit.


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