Should council funding depend on how deprived an area is?

Geoff Driver has called for more - and fairer - funding for councils
Geoff Driver has called for more - and fairer - funding for councils
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The leader of Lancashire County Council has condemned a proposed change to the way local authorities are funded and called for an increase in the size of the “cake” which they receive from central government.

Geoff Driver described as “shameful” a suggestion that the government might downgrade the importance of deprivation when calculating how much cash councils should be given. A consultation is being carried out into whether local authority budgets should be largely based on population size.

“Local authorities have different needs and have different resources available to meet those needs,” County Cllr Driver said.

“They’ve got different age profiles, different needs in schools and different areas of deprivation which all inevitably have an impact - we have some of the most deprived wards in the country.

“It’s shameful [to propose removing] the deprivation element, because that is one of the most significant factors in determining how much a council needs to spend - and it concerns me greatly if government is moving away from those basic principles of how they give local authorities financial support.”

The government consultation reveals that it is minded to introduce a new formula which allocates money to councils depending on how many residents live in their area. That calculation would account for 20 percent of the county council’s government grant.

The remainder would be made up of cash distributed for specific services, several of which - adult and children’s services, public health and fire and rescue - would continue to be adjusted for deprivation.

County Cllr Driver acknowledged that their inclusion would “mitigate” the effects of the proposal, but he also called for councils to speak with a single voice on the issue.

His own stance has put him out of step with the County Councils Network, which represents often more rural authorities and has broadly welcomed the proposed changes for lessening the “disproportionate” significance attached to deprivation. However, the Special Interest Group of Local Authorities, speaking on behalf of councils including Blackpool, described the plans as “illogical”.

“The last thing we need is the different types of council competing against one another - the cake needs to be bigger and the allocation of that cake needs to be fair,” County Cllr Driver said.

“At Lancashire County Council, we’re keeping our head above water, but local government funding simply can’t go on like this.”

The Conservative leader was speaking shortly before ministers confirmed how much County Hall will have in its coffers for the coming year. The authority’s so-called ‘spending power’ will increase by 3.3 percent during 2019/20 to £788m - a figure which includes all government grants and council tax revenue.

But the county council is still trying to eliminate a budget deficit which is down from a peak of £200m three years ago - but is still forecast to stand at £46m by 2022/23, even if a new round of savings is approved by councillors later this month.

Every local authority in Lancashire has now had its spending power confirmed for the financial year ahead. Over the past four years, eleven out of the county’s twelve district authorities saw cuts to the funds available to them - with reductions in excess of 10 percent in most cases.

The standalone councils in Blackpool and Blackburn received increases of less than one percent, while the county council was handed a 7.6 percent increase over the period, close to the rate of inflation. The England average across all councils was a rise of 3.8 percent.

The Ministry of Housing, Communities and Local Government was approached for comment, but did not address the specific proposal to change the criteria for council funding.

Secretary of State, James Brokenshire, said: “This year’s settlement paves the way for a fairer, more self-sufficient and resilient future for local government. That is why local authorities will have more control over the money they raise and a real terms increase in their core spending power.

“The settlement also recognises the pressures councils face in meeting growing demand for services and rewards their impressive efforts to drive efficiencies and rebuild our economy.”

VIEW FROM THE DISTRICTS

Under the government proposals, district councils - which look after areas such as waste collection and parks - would have almost all of their funding calculated purely on the basis of population, because they do not provide the services which would still see a payment for deprivation.

The District Councils Network has described the suggested approach as “a very welcome development”, but the two district authorities in Lancashire which responded to a request for comment did not agree.

Dean Langton, Chief Executive of Pendle Council, said: “Removing the deprivation factor from the foundation formula would further disadvantage Pendle which is amongst the most deprived* areas in the country according to the Indices of Deprivation.

“To do this will mean our share of government funding wouldn’t fully reflect the challenges we face in delivering services to some of our most deprived local areas and will, arguably, further exacerbate inequality.”

“This view is backed by the Local Government Association’s cross-party fair funding task and finish group which firmly supports the inclusion of a deprivation factor to ensure councils receive a fair share of government funding from 2020.”

Ian Moran, the Labour leader of West Lancashire Borough Council, said:

“The changes to the local government funding formula will mean that the cuts to this year’s budget are marginally less than expected. However, this remains little more than tinkering around the ages from a Conservative government that has made unprecedented cuts to local authority budgets year-on-year since 2010.

“We can hardly thank them for making further cuts, albeit slightly less painful ones than anticipated. At the same time, they are trying to shift the blame for these cuts onto local authorities. Our residents deserve better than these failed austerity policies.”

COUNCIL CASH

Here is what each local authority in Lancashire will have available to spend in 2019/20 - and how much their budgets have changed since 2015/16.

Lancashire County Council: £788m (+3.3%)

Blackburn Council: £122m (+0.5%)

Blackpool Council: £133m (+1.0%)

Burnley Council: £14m (-11.5%)

Chorley Council: £13m (-10%)

Fylde Council: £10m (-5.4%)

Hyndburn Council: £11m (-13.0%)

Lancaster City Council: £19m (-6.2%)

Pendle Council: £12m (-14.9%)

Preston City Council: £19m (-3.3%)

Ribble Valley Council: £7m (+7.3%)

Rossendale Council: £8m (-10.8%)

South Ribble Council: £11m (-7.5%)

West Lancashire Council: £12m (-11.8%)

Wyre Council: £12m (-10.9%)