Councils to face 4.4% average cuts in 2011/12

Announcing the ‘Local Government Finance Settlement for 2011/12 and 2012/13' which sets out each English council's funding for the next two years, Mr Pickles said that no council would have its central government support cut by more by 8.9% in either year in what he described as a “progressive settlement”.

And, he linked the announcement to the Localism Bill, also published today (see letsrecycle.com story), claiming that, while resources were tight, councils would have “unprecedented freedoms” over how to prioritise their money.

“The need to reduce public spending means that this is a unique settlement, but also a unique opportunity for councils to show how efficient they can be, root out the wasteful spending that still exists and ensure that money goes to the frontline public services,” Mr Pickles said.

In particular, Mr Pickles highlighted the potential for councils to share operations to reduce costs as well as reducing executive pay.

Today's announcement provides more detail of the cuts originally outlined in October's Spending Review, with councils facing an average government funding cut of 26% over the next four years (see letsrecycle.com story).

Outlining the approach taken to the settlement, Mr Pickles said: “By adopting an intelligent and fair approach to the way funding is allocated we have been able to ensure those parts of the country that are most reliant on central funding continue to get the lion's share of the taxpayers' money that is available. Funding fairness underpins this settlement.”

He stressed that each council's settlement reflected local need, rather than capita distribution – meaning, for example, funding per head for residents in Hackney in 2011/12 will be £1,043 compared with £125 per head in Wokingham.

He also stressed that government was “topping up” the grant with £125 million over the next two years, and also setting aside £650 million to ensure that councils who chose to freeze their council tax next year can protect service delivery.

LGA

However, despite Mr Pickles' positive assessment of the settlement, the Local Government Association (LGA) labelled it the “toughest local government finance settlement in living memory” and warned of service cuts to come.

Baroness Margaret Eaton, chairman of the LGA, said: “A few councils have seen a reduction in the money they receive from the Government of up to 17% in the first year. As a result councils face a total funding shortfall of £6.5 billion over the next year.

“We have been clear that the level of spending reduction that councils are going to have to make goes way beyond anything that conventional efficiency drives, such as shared services, can achieve. We have to face the fact that this level of grant reduction will inevitably lead to cuts in services.”

Her sentiments were echoed by Labour's shadow communities secretary, Caroline Flint, who said: “”The reality is though the coalition's decision to hit lower and middle income neighbourhoods with the heaviest cuts in the next 12 months will inevitably impact on the vital frontline services families rely on, jobs and growth.”

She added: “As a result, roads will go unrepaired, potholes unfixed, streets unswept. Youth clubs will close, libraries will shut down and fewer will find their council able to help with social care.

“And because Eric Pickles and the government have chosen to hit councils with frontloaded cuts in the first year, far from liberating community groups, the voluntary sector and charities to do more, as the government promises, they may be so hampered they end up doing less.”