Rural areas get extra Government cash after 'revolt'

10:40pm Monday 4th February 2013 in News Photograph of the Author By Robert Merrick, Parliamentary Correspondent

MINISTERS today (Monday, February 4) found an extra £700,000 for some of the region’s local councils - as they confirmed funding cuts of almost £168m.

Rural areas were allocated a total of £8.5m for the next financial year, after a revolt by shire Tories against “grossly unfair” cuts in local government spending.

Conservative-run North Yorkshire County Council will receive £374,000 and Labour-run Durham County Council an unexpected £224,000, in 2013-14.

District councils in North Yorkshire will also receive small top-ups, to “reflect the costs of those services which can be more expensive in highly rural areas”.

The move follows an outcry from about 120 councils, which threatened to bring a judicial review against the proposed funding settlement, announced in December.

Rural councils were due to receive 3.81 per cent less from central government - compared with cuts of 2.05 per cent for urban councils.

However, yesterday’s announcement brought little relief for most town halls, confirming cuts described as “unsustainable” by local government leaders.

The Northern Echo revealed, before Christmas, that councils in the North-East and North Yorkshire will be stripped of a staggering £168m of funding over the next two years.

That is the size of the reduction in grants to each local authority, what is now called the ‘start-up funding assessment’, rather than formula grant.

There will be double-digit percentage cuts, over two years, in Middlesbrough (10.2 per cent), Stockton (11.1 per cent), Hartlepool (11.3 per cent) and elsewhere.

Before today's (Monday, february 4) final settlement County Durham was set to lose £29.73m (10.5 per cent) and North Yorkshire £22.2m (14 per cent).

In the Commons, Chi Onwurah, the Newcastle Central MP, said children in the city were offering to give up sweets and pocket money, to try to save libraries and other council services.

Newcastle City Council will lose £21.02m of grants over the two years to 2015 – and expects to make £100m of cuts over four years.

However, local government minister Brandon Lewis, told MPs: “The settlement is a fair one – fair to north and south, fair to rural and urban areas and fair to shires and metropolitan areas.

“For example, Newcastle has a spending power per dwelling of £2,516, £700 more than Wokingham which has £1,815.

“No council will receive a revenue spending power reduction of more than 8.8 per cent in 2013-14. The government has presented local government with a good deal.”

The government has insisted councils will prosper under a new funding system, allowing them to retain future increases in business rates to spend on local services, instead of handing the cash to the Treasury.

However, the National Audit Office said the shake-up carried huge risks for less prosperous areas – and raised the prospect of councils going bust.

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