North East councils have joined a call for fairer funding after a report showed the region’s devolution deal will restore only a fraction of the cash lost in years of Government costs.
The Special Interest Group of Municipal Authorities (Sigoma) - which includes councils in Newcastle, Gateshead, North and South Tyneside, Sunderland and County Durham - has called for a shake-up of council funding to focus on local needs rather than rewarding economic growth.
A report from the group - which has been published as voters head to the polls in Tyne and Wear’s five council areas - said that councils in the North East are collectively worse off by nearly £700m a year due to successive Government budget cuts, while the new North East devolution deal is worth around £48m a year. Newcastle has lost £127.9m a year due to cuts over the last 13 years, the report says, the equivalent of £935.87 per household. Durham County Council is said to be £147.7m worse off each year.
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The group said it is also harder for councils in the North East and similar areas to raise money from council taxes as direct Government funding is gradually reduced.
Sigoma called on the Government to move to a funding model that “restores the full distribution of business rates, recognises the primary importance of providing services through a needs formula (and includes) a full reset of business rates to allocate more funding according to needs”. It also wants an end to competitive bidding processes for levelling up funding, which it said benefits councils with the “slickest bids” rather than those that “need support the most”.
Among other priorities, Sigoma said the allocation of £200m over the next two years for reform to children’s services must be increased to £2.6bn over four years, as recommended by the Government-commissioned independent review by Josh MacAlister.
The report says: “The commitment to ‘level up’ the country is very welcome given the significant regional disparities that exist in the country. However, many aspects of Government policy are actively harming the agenda and the ‘levelling up’ programme itself is flawed in content and scope.
“Funding provided for the various Levelling Up Funds is a drop in the ocean compared to what has been lost through austerity since 2010/11. Failure to replace funding lost through austerity and match rising demand and inflationary pressure means that many councils are having to make cuts to services in the coming year. This goes directly against ‘levelling up’.
“Meanwhile, the bidding process for limited funds has meant that many councils have wasted time and money, an estimated £30,000 per bid, preparing submissions whilst allocation methods have failed to effectively target the areas most in need, opening the Government up to criticism of potential political influence by ministers. The Government have spread Levelling Up Fund allocations across the UK in order to get the ‘best geographical spread’, however this has resulted in funding being distributed across the whole range of deprivation rankings, including to some of the least deprived areas in England. As our vice-chair Graham Chapman said: ‘You can’t level up everywhere, you have to choose’.”
The report says the North East received the second lowest Government funding per head for transport schemes, despite having the lowest levels of car ownership outside London. It also highlights the difficulty of raising more business rates in areas like the North East.
Sigoma’s leader Stephen Houghton said: “Today’s announcement lays out a clear manifesto that will help support councils across the country that are on their knees after 13 years of continuous cuts and provide them with the financial support to invest in their local communities and help generate long-term prosperity. This manifesto is truly levelling up in action.”
The Department for Levelling Up, Housing and Communities has been contacted for comment.
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