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Councils stuck in funds limbo; FINANCIAL UNCERTAINTY AFFECTING PLANS.

Byline: JONATHAN WALKER Political Editor jon.walker@trinitymirror.com @jonwalker121

TOWN halls across the North East have warned they are unable to plan because of uncertainty about Government plans to change the way they are funded. Newcastle City Council says it is attempting to cope with cuts of PS291m since 2010, and the continued uncertainty is making it "extremely difficult to effectively produce longer term financial plans".

The Government is planning dramatic reforms to the way councils are funded, with councils keeping money raised from local employers through business rates. Councils currently keep 50% of business rate revenue, and before the 2017 general election the plan was to increase this to 100% by 2019.

But the legislation to do this was suspended when the Government called a general election last year.

The Government says it is still committed to introducing the change, but it is unclear when.

The Commons Communities and Local Government has launched an inquiry looking into the effect this is having on local authorities.

In a written submission, Newcastle City Council said the uncertainty made it hard to plan ahead: "Local government continues to face enormous financial pressures, funding cuts and further settlement cuts over the next two years, despite Government assumptions about increasing levels of council tax and business rates income. Our own council are forecasting cuts over the next two years of PS40m in addition to the PS251m since 2010 a total of PS291m over the nine-year period.

"While the funding quantum for local government remains uncertain and insufficient to meet current needs or if there is further austerity in the next funding round intrinsically there will be uncertainty in producing longer-term financial plans."

And it said: "Having limited knowledge of Government's funding plans beyond 2019/20 is making it extremely difficult to effectively produce longer term financial plans beyond 2019/20 due to so many uncertainties that impact on council funding levels not least the fact that 2020-21 is within the next settlement period."

Gateshead Council said it had been forced to make savings of more than PS143m since 2010, due to reduced grants from central government and increasing demand for services. And it's expecting to make an estimated PS88m in savings by 2022-23.

It said the move towards 100% retention of business rates had caused increasing uncertainty over future budgets, making it harder to plan ahead.

And it warned the delays could entrench the existing "unfair" funding, which had led to "disproportionate cuts" in Gateshead's funding compared to other councils. The council said in its submission to MPs: "The system is long overdue a fundamental review and any delays compound the Council's financial pressures. As such, any delays risk destabilising the Council's financial position further and compounding the disproportionate cuts that the Council has already received to its funding since 2010."

CAPTION(S):

Gateshead Council has attacked the delay in reforming the current, "unfair", funding system

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Publication:Evening Chronicle (Newcastle, England)
Date:Feb 7, 2018
Words:483
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