Rise in council funding 'a drop in the ocean'

Most council tax payers in north-east England will see a rise in their bills from April, despite funding changes the government says are benefiting the region.

Many authorities are looking to impose the 4.99% maximum increase allowed without a local referendum while also finding cuts to balance their budgets.

Gateshead Council leader Martin Gannon said key services will become unsustainable unless more money is found for local government, while Durham's Andrew Husband called current funding "a drop in the ocean".

The government said the changes will increase North East councils' spending power by £4.2bn over three years, but that figure assumes all of them raise council tax by 4.99% annually.

Local authorities in the region had hoped Labour's Fair Funding Review could bring an end to 15 years of budget cuts by offering extra help to deprived parts of England.

But while some councils have gained others have seen little movement, while even some of the winners said extra costs such as national insurance rises and the impact of funding special educational needs provision had wiped out any benefit.

In Labour-controlled Gateshead, Gannon said the changes are broadly neutral.

If the authority goes ahead with a 4.99% council tax rise in April it will gain an extra £1m, but in a budget of £350m he said that will not be much help.

"I am disappointed," he said, "Of course, I want more money from a Labour government to go to the areas of greatest need.

"But the reality is there needs to be a considerable increase in government funding, not just for Gateshead but across the country.

"The funding model for local government just doesn't work. It needs radical reform."

Gateshead's council tax increase is made up of 2.99% for general services and 2% ringfenced for adult social care.

Other North East councils planning maximum rises are Northumberland, North Tyneside, Newcastle, South Tyneside, Sunderland, Darlington, Redcar & Cleveland and Stockton.

In County Durham, the Reform UK-controlled council will get an extra £50m in funding over the next three years under the formula change.

In its first budget since the party took control last year, there are plans for a council tax increase of 3.1% alongside cuts of £10m.

But local Reform councillors accused the county's Labour MPs of falsely claiming the review had transformed the authority's finances when extra costs, such as national insurance rises and the cost of supporting the county's children, had made them worse.

Leader Andrew Husband said: "The £17m we're getting this year barely covers the interest on the debt that we inherited in this administration.

So, on a £1.5bn budget, I'm grateful but it's a drop in the ocean. It's not enough.

"The MPs have misread the whole situation.

"To get any kind of credibility and respect, they need to be doing their job, going to their government to get more money for the constituencies and the councils they represent."

North Durham Labour MP Luke Akehurst said: "I've repeatedly written to and gone in to see ministers about this and, of course, we will continue to push for even more funding for County Durham.

"But to do that in a coordinated way we need the Reform UK council to be working with us, but they seem to want to get into online spats rather than have a dialogue about how we can help them get more money."

For others, the situation looks more positive.

Hartlepool Council is planning a freeze on council tax this year, albeit by implementing cuts.

In Middlesbrough, the Labour mayor will be asking for 2% towards adult social care and, instead of cuts, Chris Cooke said improvements in funding will allow £6m of extra spending from April.

Among his plans are new youth clubs, improving street cleaning and grants for equipment for local schools.

He said: "This would not have happened and did not happen under previous governments.

"Basing funding on areas of need is a fundamental basis of what my party believes and what our party should be doing.

"This is a very good start for that process."

The government also it was reforming the way the local authority funding system worked to "remove regional divides and postcode lotteries".

A spokesperson said: "This will make sure cash is shared out in a fairer way that follows needs and this new approach will directly benefit areas like the North East."

But even Cooke said there is more to do.

He said the extra funding still leaves Middlesbrough Council £50m short of its spending power in 2010 in real terms.

"That's not an acceptable position for me and I'll continue to lobby for more, but the steps the government have taken will make a huge difference here."

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