The Government hits rural local authorites in the Spending Review with Cornwall set to lose a further £6m

Back in November the Government released its Spending Review. As always there is a lot of spin on how the review is good for people. However, as they say, the devil is in the detail. That detail was released over the Xmas period and surprise surprise despite the spin; it means more cuts to local authorities. From the words of one financial officer this settlement is one of the most complex they have ever seen.

One of (and there is many) worrying areas is the re-distribution of the Revenue Support Grant (RSG) from rural local authorities to urban ones. Yep, you have guessed it; they have moved funding from Shire Counties and Cornwall to Metropolitan and London Boroughs.

What makes this worse is there was NO consultation by the Government on the redistribution of the RSG. No wonder they did not, as this will heavily effect those two-tier authorities (District and County). It is a small mercy that Cornwall is a single tier LA. Otherwise it would have been far worse for us.

In the first year of 2016/17, Cornwall Council will lose just shy of £2m. Over the period of the review (2019/20) the total amount we are set to lose comes to £6m. This is on top of the existing cuts the Government is imposing on local authorities like Cornwall Council.

For those technically minded, Cornwall Council currently recieves 0.9% of the overall Local Government budget of £18.6bn. The Local Government department will see a reduction of budget of just under £4bn in the period up to 2019/20. In 2019/20, our share of the fund will reduce to 0.86 of a pot of £14.7bn.

For other Unitary and County Council many have been harder with the redistribution of the RSG. Devon has been hit harder and is set to lose £7.6m of the RSG. Dorset £7.25m and Somerset £3.18m. Though some of the South West local authorities have fared better than areas such as Hampshire who will set a reduction of £12.5m, Surrey £16.7m and Kent £11.2m. Remember this is for the 2016/17 period only and if you use the same formula being imposed on Cornwall Council, these local authorities could be funding reductions of £30m/£40m. (details *)

To put the £6m extra cuts in to perspective, that is our entire Library and One Stop Shop Budget in Cornwall and would still leave us £2m short. This extra cut has to be found on top of the huge cuts Cornwall Council is already having to deal with in RSG grant funding. In 2015/16 Cornwall Council received £92m; this reduces in 2016/17 to £65.2m and is set to be reduced to £14.5m in 2019/2020.

Then this funding will be phased out by the end of this Parliament. In its place the Government has said local authorities will be able to keep 100% of the business rates. One of the issues is the Government has said it would top up this if your business rates if you income from these rates is lower than your needs. However, this commitment to top up is only in the first instance, and there is no guarantee this will be a long-term top up. Furthermore, Cornwall’s industry is SME, and therefore, it gives little scope for economic growth from large-sized business. And lastly, Business Rates cannot be raised above 2% unless you have a directly elected mayor, but a local authority can lower the rate to any level.

The Government has also claimed in its statements it will be helping rural local authorities with additional funding. For Cornwall Council this will amount to £200k in 2016/17. It is set to increase in later years. But this additional funding no-way makes up for the larger cuts to the RSG.

There is a further hit to two-tiered areas is in the New Homes Bonus (NHB) which District Council’s receive. This could be up to half the amount they receive. This money will be given to the County Councils are part of the Better Care Fund (BCF). Cornwall Council receives the NHB and the BCF. So for us, it is less painful than the two-tiered local authorities.

There is also going to be a massive bun-fight between the District Councils and County Councils over the split of business rates. Currently, this is split 80/20 in favour of the District Council’s (DC collect and give County 20%). The Government has indicated it will change this split in favour of County Council.

In a spooky coincidence, the Government has changed the regulations to allow District Council to merge and become unitary council in a fast-track process. In fact I think the plan is to force District Council’s into becoming Unitary Council’s via reducing the funding to Districts.

The bugbear is Councils get the blame for the Government’s cuts. I can assure you the cuts we are having make are not easily done, but when you have less money to provide services, you have little choice but to reduce services. And the reason why is the Government has cut the funding!!

One thing is for sure, this settlement is not good news for local authorities despite the spin!
*Figures correct from the LG Settlement to LA’s as of 18th Dec 2015.

14 comments

  • Martin Menear

    Thanks for the explanation and detail Andrew. I hope this information goes far and wide and that voters will recognise that these are the actions of a Conservative government held up by by 6 Conservative MPs in Cornwall. Come 2020 when libraries are shut, swimming pools gone and social care a distant memory for most in need, I hope they will remember and elect Labour MPs across the County.

  • drjonmills

    Cornwall is not a Shire.

  • Andrew Wallis

    Edited to correct (I know it isnt, but this is how Cornwall was included)

  • Ann Phillips

    Thank you for this information…an x

  • Mick

    Who would want to elect labour MPs next time round, they’re no better than the Torys. They got the country into the debt it’s in now. Nice election plug though for the next council election. Labour won’t help Cornwall Council with funding, take a look at the past.

  • A couple of corrections required Mick. First the bankers caused the crisis nationally and internationally – not Labour spending. The borrowing was to bail out the bankers. The Labour government under Gordon Brown is recognised for making a huge contribution to preventing an even worse crisis. The errors have come with the failure of this government and the coalition to ensure the banks paid back the debts through taxation and their failure, through austerity budgets, to allow the E onomy to grow. Secondly, the Labour Party is now under new management. The economic policies of a new Labour government would see corporations and the rich pay their share and that would see an end to the austerity policies and cuts imposed by this government. It would also invest in social housing and other infrastructure to deal with many of the problems acutely suffered in Cornwall. Thirdly, it was a Labour government that enabled Cornwall to receive Objective 1 status and receive EU funding.

  • Mick

    Martin Menear

    This is a cllrs blog not political party platform, but as you’ve tried to justify labour tactics, I’ll point out labour shouldn’t have bailed out the banks, as much as it did, Barclays didn’t need bailing out. And as for new leadership or management as you put it for the Labour Party, they can’t even get on with each other and agree in their own party, and to vote for a party and leader that won’t even protect this country with a nuclear deterrent!!! ok we’ll just all be sitting targets for invasion. What would we fight back with bows and arrows. Naive if you think other countries won’t use nuclear weapons on us. Back to the council, why didn’t labour invest in councils when it had the chance with social housing etc. Labour had years in power to do what they promise now. If you want labour in then I think you need to get a new labour leader. And Cornwall Council can’t blame all the spending cuts on government cuts, Cornwall Council waste enough money. The lib dems have more chance of a comeback than labour. You can’t even put up a decent labour candidate except a Cornwall Cllr at the last election. Who wants to vote for a Cornwall Councillor for a local MP.

  • Martin Menear

    Just too many errors of fact in this to respond to.

  • Gilly Zella Martin

    I think the Conservative councillors on Cornwall Council (including any Conservatives that jumped political party ships to Independent, to suit) cannot really complain about the lack of funding for Cornwall Council, it is after all, presumably what they voted for!

    It is just a great shame we all have to suffer the results of the cuts.

  • Mick

    Or do you mean Martin Menear you don’t really have the answers!!! I’ll be voting lib dem. Not how you think people should vote.

  • Grenville Prowse

    I have not seen much sign of any protest from Cornwall council about all these cuts, I cannot understand why councils have not banded together in large groups and put up a more coordinated attack on this out of touch bunch of clowns in westminster

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