Local government settlement: Most deprived councils hit hardest by cuts
The local government finance settlement frontloads cuts, meaning councils will suffer bigger reductions in the first of the two-year period than they will in the second.
Councils in the poorest parts of England have been hit hardest by the local authority budget cuts announced yesterday by communities secretary Eric Pickles, an analysis by Regeneration & Renewal has revealed.
Yesterday, Pickles unveiled the local government finance settlement, setting out the amount of funding available to town halls in England in 2011/12 and 2012/13.
An analysis of the figures, carried out by Regeneration & Renewal, reveals that the 25 most disadvantaged councils according to the 2007 Index of Multiple Deprivation will see their budgets reduced by an average of 9.4 per cent in 2011/12.
The 25 least disadvantaged councils will have their budgets reduced by an average of 4.6 per cent in 2011/12, according to the analysis.
Anna Turley, deputy director of think-tank the New Local Government Network, said: "When the cuts in local government funding are set against the Multiple Indices of Deprivation … poorer areas will shoulder a disproportionate percentage cut. This will pose significant challenges for areas already facing the greatest social and economic difficulties in their communities.
"Councils will have to take radical steps to transform the way they deliver services in the years ahead to meet this unprecedented challenge."
The Department for Communities and Local Government said yesterday that no council would receive a reduction in its "spending power" of more than 8.9 per cent in the next financial year.
But commentators say that the actual cuts are in fact higher than the DCLG’s "spending power" figures for 2011/12, because these figures were wrapped in with each councils' revenues from council tax and also included funding for NHS support for social care, which was not part of the 2010/11 settlement.
The DCLG said that a transition fund would provide £85 million of cash in 2011/12 and £14 million in 2012/13, which would reduce the maximum spending power reduction for councils in the next financial year to 8.9 per cent.
A DCLG spokesman said that this extra money was intended to help councils manage "issues relating to the ending of the [previous Labour administration’s] Working Neighbourhoods Fund", which was directed at poorer councils.
According to DCLG, 38 councils across England – including the deprived London boroughs of Hackney, Newham and Tower Hamlets - received reductions of 8.9 per cent in their overall "spending power" for 2011/12.
Other local authorities to suffer 8.9 per cent spending power cuts include Blackburn with Darwen, Burnley, Great Yarmouth, Liverpool and Salford – all councils located in some of the most disadvantaged parts of the country.
This comes despite widespread concern that local authority spending will hit poorer councils the hardest. A recent report by the Special Interest Group of Municipal Authorities (Sigoma) predicted that town halls would face cuts of 10.7 per cent as the Government seeks to implement the 27 per cent overall reductions announced in October’s comprehensive spending review.
Caroline Flint, Labour shadow minister for communities and local government, said: "[Communities secretary] Eric Pickles imposes unprecedented cuts on local authorities while promising them greater power through the Localism Bill. He is, effectively, offering councils devolution while holding a gun to their heads."
