Calls for fairer funding continue in Cambridgeshire – as Government announces provisional 2018/19 deal

Councillors in Cambridgeshire have expressed disappointment after the provisional Local Government Settlement announcement  (December 19) failed to increase Central Government funding for the county – although remain hopeful the county’s ‘fairdeal4Cambs’ campaign will lead to a funding overhaul.

Communities Secretary Sajid Javid MP announced he will shortly publish the government’s long awaited fair funding review consultation.  This will consider the way the formula is calculated and any changes needed to more accurately reflect the current position across the UK.  

The current formula, which has remained unchanged for many years, sees the average London Borough receiving £75m a year more than Cambridgeshire, and even the average UK county council receiving £13.7m a year more.

As part of his statement Mr Javid announced that the amount councils will be able to keep from business rates in future years will only rise to 75% of the amount raised locally instead of the expected 100%, and that no further central funding will be made to cover the local government pay offer of 2% for staff on nationally agreed pay scales, with more for the lowest paid. 

However he did announce that the planned reductions in the Rural Support Grant in 2018-19 and 19-20 will no longer go ahead, and although this doesn’t benefit county councils, it will offer some benefit to district councils covering rural areas – including some of those in Cambridgeshire.    He also raised the limit on the amount of council tax that could be raised locally without a referendum by 1% to 2.99%

But overall the announcement looks set to keep Cambridgeshire– the fastest growing county in the UK – around the 3rd worst funded county council in the UK.

“We are disappointed that there has been no overall uplift in Central Government funding to acknowledge the increased pressures we face due to growing demand – particularly for adult social care where we are fighting hard to provide safe independent dignified lives older people in our county, “said Cllr Steve Count, Leader of Cambridgeshire County Council.

“As a county which sees enormous business growth in some areas, we need to be able to spread prosperity to parts of our county which struggle economically so must keep all of the business rates raised in the county to benefit the county. 

“We have been talking to central government via our MPs - pressing for the historic funding formula on which the RSG is calculated to be reconsidered so that it is based firmly on existing and predicted need.  However transitional funding previously allocated by government to plug this unfair inequity has now been withdrawn. Furthermore lifting the cap by 1% on council tax, so that local residents can be taxed more to paper over an unfair National formula, hardly seems fair on the hard pressed taxpayers of this County.

“Last month speaking on the BBC Sunday Politics Show –Sajid Javid said he had heard our message and agreed it was time for such a revision, so I am pleased consultation is about to begin.” he added.

Local government in the UK currently receives its funding from four main sources;

  • The Rate Support Grant,
  • Council Tax –raised from local households and all spent locally
  • Business Rates – collected centrally with only 50% retained locally and then some additional funding re allocated according to need via a separate government formula 
  • Income the council raises itself from charging for its services or from income generation schemes like the Soham Solar Farm and Cambridgeshire County Council’s housing company.

Between 2015 and 2020, the Revenue Support Grant will have shrunk 77p in the pound, according to the Local Government Association   And today MrJ avid announced that a consultation would be published in Spring 2018 regarding the issue of negative RSG currently forecast in 2019-20 for councils such as Cambridgeshire.

Almost half of all councils are due to completely lose core central government funding from the RSG from 2020/21, Cambridgeshire faces this a year earlier.    Mr Javid announced today RSG  today will be replaced by 75% business rate retention, and removal of the public health grant ‘ring fence’ with  “suitable transitional” arrangements put in place while councils adjust to the new regime.

The LGA has previously called for more flexibility over how councils raise money. It wants each area to keep all of its own business rates, a policy announced before the election that was not reintroduced in the Queen’s Speech and today’s settlement partly reintroduces this scheme.