• EDDC letter to Pickles: Cuts on svcs could have severe impact

    25th October 2013 | News | Claire
  • I took a different view and said that I thought it was important that the points were made in public, so that residents could see that we were fighting their corner. It is their money after all. 

    The letter has been a while coming and required some chasing, but I think the arguments are well made…………………………………………………..

    To Eric Pickles, secretary of state for communities and local government

    East Devon District Council Concerns on Government Funding Reductions

    As Chair of the Council’s Overview and Scrutiny Committee I have been asked to write to you to express concern on the financial funding reductions and risks falling to our Council and similar local authorities.

    These concerns focus around the following areas:
    – Unreasonable levels of funding reductions
    – Unfair funding for rural authorities when compared with urban authorities
    – Risks associated with funding a local council tax support scheme
    – Recent proposals to reduce payments on New Homes Bonus and for monies to be passed to Local Enterprise Partnerships

    Unreasonable levels of funding reductions.
    Although the need for a debt reduction policy is understood, it is believed that local government is seen as an easy option and similar levels of funding cuts have not been imposed on other areas including central Government itself.

    This Council has seen a third reduction in formula grant funding over a three year period with further reductions to come.  As a Council with a record of keeping its Council Tax at one of the lowest, it is becoming very difficult to maintain services at the level that our elderly and relatively rural residents expect and need.

    Unfair funding of rural authorities.
    Linked to Government funding of this Council we have, over a number of years, requested fairer funding for rural authorities.  Despite acknowledgement by Government that there needs to be a greater reflection of the cost of rural service provision (during the 2013/14 settlement consultation), this has not occurred in the Governments funding assessments. 

    The Local Government Finance Settlement 2014/15 and 2015/16 (Technical Consultation) confirms a failure to make any progress towards the narrowing of the rural penalty where urban areas enjoy 50% more funding per head (63% in terms of £ per property) than their rural counterparts.  Indeed, the gap has widened slightly on the most recent figures.  DCLG own review last year identified the additional needs of rural areas but then only a small proportion of the extra funding identified in that review ever reaches its target authorities.

    Although many urban authorities are clearly suffering under the recent cuts, the position of rural authorities needs special attention. The extra costs of providing services in sparsely-populated areas have never been properly recognised.  Rural authorities generally have had fewer discretionary services and hence cannot implement the cuts so easily. Many rural areas, despite their residents paying more in council tax than their urban counterpoints, do not benefit from a high council tax base to offset some of the cuts; and rural areas cannot possibly benefit from business rates growth as much as most urban counterparts.

    We reiterate our desire to reduce the rural penalty steadily and by ten percentage points by 2020 in line with the current formulae.  If the settlements for 2014/15 and 2015/16 cannot be used to begin this process then the Efficiency Support for Services in Sparse areas (ESSSA) Grant introduced this year should be increased and extended to the same end.

    Risks associated with the introduction of local council tax support with reduced Government funding.
    The Government’s introduction of Local Council Tax Support scheme, moving away from a nationally funded Council Tax Benefit Scheme put significant financial risk at local authority level as it is demand driven being funded locally is a much bigger risk for a local Council as a proportion of their budget than with the previous national scheme.

    This was particularly harsh with its introduction having to be implemented with a 10% national cut in funding, made even worse for those authorities with high pensioner numbers. In East Devon, this meant a reduction in working age customer payments of 24%, unless other service cuts or additional income were used to match the funding reduction.  At the time, this was given as a specific grant. However, it is now to be merged into the overall funding assessment for local authorities and we fear it is to be subject to the general funding reductions. 

    Reduction in New Homes Bonus monies.
    In the area of housing and business growth, East Devon has acted proactively to comply with Government policy, only to be told now of a further proposal by Government to reduce the incentive grant linked to this area. The Council has worked hard to deliver growth for new homes and business in the District and it has based its medium term financial planning on the promise of being rewarded for such activity to allow further investment. 

    The Government are now proposing to change this by top slicing New Homes Bonus (NHB) to provide funding to unelected LEPs.  NHB, when introduced, was guaranteed to local government, to be spent at the discretion of local government, used to develop future financial funding plans and, in case forgotten, this money comes from top slicing core local authorities’ service funding. Again it appears that local authorities are being penalised with the Government changing the funding rules to Council’s detriment.

    The purpose of this letter is to highlight the severe problems that local authorities are facing and to make it clear any further reductions will result in this Council having to make cuts in service delivery that could have severe effects on our residents in the future.

    Yours sincerely

    Councillor Tim Wood
    Overview & Scrutiny Chairman