I mentioned yesterday that in addition to the three dozen written statements in the Commons on the last day of term there were two oral statements. The first of these was what is fast becoming a bit of an annual tradition, the revealing of the funding packages for local councils up and down the land.
The way local government finance operates is fiendishly complex. The first thing to note that the Council tax we all pay provides only one element of the funding Councils have. They also get funding from central government, which I often still refer to as the ‘block grant’ essentially re-distribution of business rates which are set nationally. There can also be some grants which are ring-fenced for specific purposes and then there are the fees charged for individual council functions such as the provision of car parking and planning application fees.
On Thursday the Secretary of State for Communities and Local Government Greg Clark announced that whereas in 2010 local councils were 80% dependent on central government grants by 2020 they will be funded 100% by council tax, business rates and other local revenues. The plan is to allow local councils to retain 100% of business rates thereby forging the link between local business success and civic success.
As for the period until 2020 the funding is broadly unchanged but,of course, that means in real terms, after inflation, there will need to be savings on average of 6.7%. That, at least, is what the statement said. Every local authority is different and I can think we can safely assume that every Labour controlled authority will complain of swinging and unfair cuts. I suspect the reality is the outlook is a bit rosier than many had feared. Even though nobody likes to admit it given that local government makes up around a quarter of public spending there would have had to be cuts even if Labour had won the general election.