Cornwall’s Local Government Finance Settlement for 2017/18

It is always a nervous time in Local Government circles when the Government announces its financial settlement for this sector. Over the last few years, the news has not been positive; you know it is going to hurt, but how much it will hurt you only find out in the announcement.

This announcement and publication of the settlement marks the start of a consultation period until 13 January 2017. The final settlement for 2017/18 will be laid before the House of Commons in February 2017.

So how much hurt is contained within the proposed settlement? The positve news is overall on first review the settlement remains largely as expected as there is no change in the levels of Revenue Support Grant, Rural Services Delivery Grant or Better Care Fund. However at this stage not all information is available and as always the devil will be in the detail. But we do know there have been changes to the following grants:

  • New Homes Bonus (NHB) – due to further changes in the way the reward is calculated NHB will reduce in 2017/18 by c£0.750m compared to the existing assumptions within the Council’s financial plan;
  • Adult Social Care Support Grant – This is a new grant that has been established, funded from savings in the New Homes Bonus. Amounts will be distributed according to relative need and Cornwall’s indicative allocation is £2.806m but is one-off only for 2017/18. (sadly nothing for Children’s Social Care)

At face-value, there is also a bit of positive news with the Government confirmed that Cornwall Council will pilot 100% Business Rates Retention from April 2017, although the details of that scheme are yet to be announced and are expected to form part of the final settlement in February 2017.

There is good news on Council Tax referendum limits for Town and Parish Councils. As the proposed introduction of a referendum limit to larger Town & Parish Councils will be deferred, although the Government will continue to monitor the situation and look to make excessive increases more transparent. If this was implemented it could have affected at least six Town Council’s in Cornwall.

And now for the bad news. As you maybe aware, the Government allowed local authorities to add onto the Council Tax bill a 2% levy for Social Care. Now the Government is allowing local authorities to increase this percentage. I totally support we need more money in Social Care; however, I have two concerns on this.

The first is Social Care should also include Children’s Social Care, but this extra levy cannot be used to help any Children’s Social Care, in fact is it rather limited on what is can be spent on. So to call it a Social Care levy is rather misleading!

The second is the Government has introduced a postcode lottery on Adult Social Care by means of this levy; whereas it should be properly funding the service in the first place – and yes that includes Children’s Social Care too. A further problem is as the Government is not funding it properly by passing the buck to a local authority who may not want to increase the Council Tax further because of pressures on its residents finances. If a local authority does not increase the levy, then the Government will just blame the Council for not providing the right level of funding. Hardly fair.

Anyway, lets hope there are no hidden surprised tucked away in the detail…

Local Government funding is under threat again

The impact of cuts to local government are starting to be clearly seen by the public. It is of no surprise really, as you cannot reduce Cornwall Council’s budget of over £320m and not have an impact on services which either results in those services being reduced, or in a few cases, stopped completely. Of course the Council gets the blame for having to deal with reduced budgets and the government gets away with it scot-free.

The Chancellors July emergency budget has clearly expressed more savings to be found from ‘non-protected areas’ in government. The Department for Communities and Local Government is one of those non-protected areas and could find itself with a further 25% – 40% cut in budget.

It is a common misunderstanding that people believe the Council’s income is solely from Council Tax. The picture below clearly (I hope) shows the amount of funding the Council receives and where it is spent.  budget1

 

Between 2010 and 2014, £176m was taken out of the Council’s budget. From 2014 till 2018, the Council has to save a further £154m. The cuts will be painful, but the Council’s plan has been to ‘go early’ and take £60m in the first year as this actually protects services long-term. The rest will be reduced £25.5m 2016/17, £38.2m 2017/18 and £30.2m in 2018/19. The vast majority of these savings will be from staff and other efficiencies.

The Council’s current budget has been set on a 33% reduction. If the Chancellor wants a further 25%-40% cut in local government, then sadly, we in the Council will no doubt have to look at our budget again.

If the £205m the Council receives in government funding is reduced in the Autumn Statement, my fear is there is limited option left open to the Council to make up the shortfall. As Council Tax raises are capped at 1.97% and this increase is already taken into account in the Council’s four-year budget. It could monetize certain services, but these ideas are met with very vocal objection. If the shortfall cannot be found, then services will be affected.

We in the Council are at the mercy of the Chancellor and will find out our fate on November 25th when details of the Autumn Statement is released.

The Government’s Local Government Finance Settlement and its impact on Cornwall Council

The Government has just released its Local Government Settlement. The first thing Local Authorities have to do after the announcement is to decipher the Governments spin annoucement into reality of pounds, shillings and pence. That is not always easy, as the true details often come out in the following weeks and months. And by going by last years settlement, the Government announced its settlement, then promptly change it.

For Cornwall, the early indications are this what the Council expected. This means the Council’s Budget  for 2014/15 there will – hopefully – not  require much change. In other words, the cuts and reductions during this period will happen. If you haven’t yet realised this amounts to £196m  of reduced funding for the next fve years.

Now lets look at the ‘good’ news in this settlement. The settlement has allocated additional funding of £462k;  as the Government has finally smelt the coffee and realised providing services in rural area is more expensive.  This extra funding will be included within our Revenue Support Grant from (2014/15). Also there is an additional £467k New Homes Bonus monies as a result of Cornwall’s performance in bringing empty homes back into use.  

Now for the bad news. The Business Rates Top Up Grant will be £264k lower than the Council anticipated. The Council believes this is due to the increase in this grant also being linked to the cap on business rates at 2%.  The Council will await clarification on this matter. The Council tax base growth was 0.68% rather than the estimated 0.75%. This will result in £0.171K less income from Council Tax.

However, the real worry is the Governments intention to re-look at the Council Tax cap . Currently this cap is set at 2%, and if a Council wishes to raise Council Tax above this cap, then a costly referendum has to be held. Now there are hints comings from Government which could mean this cap being lowered. And in future this cap could include larger town and city council’s. This is very worrying, as whilst no-one want to raise Council Tax unnecessary, but sometimes it has to be done to continue to provide services. The Government is set to announce its decision early new year.

More details to follow, or a completely different settlement once the Government changes its mind like last year. But I hope this gives you an insight to the Governments announcement.