New freedoms to raise an additional 1% in council tax will raise just one sixth of what is being cut from Nottinghamshire County Council’s budget – putting local services at threat whilst rural taxpayers pay more than their urban counterparts.
Figures from the County Councils Network shows that Nottinghamshire County Council faces a 41% drop in its core funding by 2020. With the ending of two additional grants that the county council previously benefited from, Nottinghamshire faces a reduction of £18.4m over the next two years.
The extra 1% on council tax, announced in the provisional Local Government Finance Settlement, will only raise £3.1m, failing to offset these reductions in funding. At the same time county councils face additional costs from inflationary increases, and the National Living Wage, whilst demand for services also rises.
Cllr Kay Cutts, Leader of Nottinghamshire County Council, said:
“There is compelling evidence that people living in Nottinghamshire and other county areas are consistently paying much more money in and getting much less out – essentially propping up major spending in the major cities and in London in particular.
“There is a fundamental mismatch between the level of funding available to counties and levels of demand for our services, particularly social care. Despite making extraordinary efficiency savings of £255m since 2010, Nottinghamshire remains underfunded in comparison to other local authority groups such as metropolitans, London boroughs and cities. This gap is unfairly and increasingly being met by county tax payers.
“We are regrettably proposing to implement a 2% adult social care precept and 2.99% council tax increase in 2018/19, but the £16.4m this will raise is in the face of a £21.8m reduction in Government funding and additional budget pressures in social care and other areas, contributing towards an anticipated budget shortfall of £55m by 2021/21.”
A delegation of County MPs have had crunch meetings with both Local Government Secretary Sajid Javid and the Chancellor this week, in a bid to secure extra resource for councils, including an extension of transitional grants, or the adult social care grant, before final settlement is announced next week.
County leaders say without new resources, the shortfall in funding will lead to them having to make ‘unpalatable’ decisions unless their government rethinks its funding allocations to local authorities. They warn that bus services, children’s centres, and libraries will have to be cut, new charges will be introduced for social care services, whilst there will be less money for road maintenance and pothole repairs.
They say that counties are unfairly penalised, as Nottinghamshire County Council’s core funding will reduce by 41% between 2015-20, compared to 22% on average for councils in London and 28% for urban, city, and metropolitan authorities on average.
Without additional funding, they will have little choice but to raise council tax next year to make up some of the shortfall. However, while the majority are likely to add on the extra 1%, they are reluctant to do so and argue it will further entrench funding and council tax inequalities across rural shire counties.
Due to continuing cuts and what CCN call an ‘outdated and unfair’ funding system, residents in counties will receive just £161 of core funding per head by the end of the decade compared to an England average of £266 and £459 in London.
As a result, county authorities have had to raise council tax to make up the shortfall. The average Band D property bill in 2017/18 is £1,662 in county areas, £132 higher than the national average.
In total, the 37 counties in England face total reductions of over £1bn over the next two years.
CCN argues that new funding could prevent the widespread closure of frontline services and non-statutory services and help limit the level of council tax rises in counties.
It would also help fulfil Ministers’ promises to smooth the transition to a new ‘fairer’ funding formula. Reforms to overhaul the way councils are funded have been delayed since they were announced in 2016 and will now not come into force until 2020/21 at the earliest.
Cllr Paul Carter, Chairman of the County Councils Network, said:
“Over the past seven years shire counties have faced the toughest financial challenge of all, with rising demand for services meaning we already face a £2.54bn funding black hole in 2020/21. This comes on top of being the lowest funded councils.
“The ending of essential grants this year for frontline and life-critical services means we are facing some truly unpalatable budget decisions, which will see rural bus subsidises all but end, new charges for care services, children’s centres and libraries disappear and potholes go unfilled.
“Even if counties raise council tax under these new freedoms, it won’t prevent many of these service reductions taking place. Residents in rural counties will be asking why they are paying so much more in council tax than anyone else but receiving so much less.
“Two years ago we faced a similar situation, and the government listened to our concern. I hope Ministers in Whitehall see sense and provide Sajid Javid with the resources he needs to extend this help and prevent unfair cuts and council tax rises in our county heartlands.”