Councils face another cut in government funding

Public services could be at serious risk if the government fails to provide long-term financial support, the Leader of Vale of White Horse District Council has warned.

The government is consulting on a one-year financial settlement for local authorities that does little more than extend the current arrangements for another year, preventing councils from being able to create stable medium-term financial plans.

The settlement also amounts to a real-terms cut in funding at a time of significant increased living costs.

The proposals contain a worrying lack of certainty over future funding – this is the fourth one-year settlement in a row the government has provided.

It also hasn’t explained what, if anything, might replace the New Homes Bonus. In areas like the Vale this amounts to a large proportion of council funds.  The lack of clarity from the government leaves significant question marks over how the council would be able to balance its budgets for future years.

Cllr Emily Smith has highlighted the dire situation that councils across the country are facing that have been increased by the impact of the Covid-19 pandemic. The Vale is no exception to this with the pandemic putting even greater pressure on the council’s finances.

In the Vale of White Horse, income from council tax is also very low compared to similar areas. Residents pay an average of £141 for the services the district council provides, compared to a national average of just under £200.

The government’s proposals do not include any increased flexibility on how councils can raise finances through council tax. Cllr Smith wrote to Michael Gove about this subject in November – the letter is available on the council’s website.

The government also expects the reduced grant funding package to cover the increase in employer’s National Insurance contributions the council will have to meet – this amounts to over £100,000 extra a year in the Vale.

Cllr Emily Smith, Leader of the Vale of White Horse District Council, said: “Following its drastic cuts in funding for councils in recent years, the government has been kicking the can down the road over council finances, and has once again failed to provide any clarity on what councils like ours should be basing their medium and long term financial plans on. 

“Like councils up and down the country, we are now facing a real challenge to balance the books in future years at the Vale.  We will always do our utmost to protect our public services and ensure that we provide support for vulnerable residents. However, without clarity over where our funds will come from in future and without greater freedom to set council tax locally, we may have to make some very difficult decisions in the coming years.”