23 December 2010

How did Cornwall do in the recent local government financial settlement?

The issue has been befuddled by the Tory Libdem government’s introduction of the novel concept of spending power. This adds in council tax revenue and some NHS funds to central government grants to local authorities and the result is a much lower figure for the reduction in funds than from the usual way of presenting the local government financial settlement, that is, changes in the core formula grant.

The formula grant is basically most but not all of the money given by central government to local government authorities. The various amounts paid to each authority aim to reflect the particular circumstances of the authorities taking account of levels of deprivation, number of pupils, the composition of the population, and so on. (See the note at the end about adjustment which makes meaningful year-on-year comparisons possible.)

Anyway, here are the £ million figures for Cornwall funding for the current and next financial years.

Formula grant
2010/11 £245.3 million
2011/12 £216.9 m
down 11.6 percent

Spending power
2010/11 £524.3 m
2011/12 £507.5 m
down 3.2 percent.

These cuts in funding are not just figures: they mean the loss of jobs and the removal or reduction of public services. Cornwall council has already produced an emergency budget to take account of the deficit-reducing program of the government and seems to have forecast the cut accurately.

How does Cornwall funding that of compare to other councils?

Looking at the funding of other councils, it is very clear that Cornwall has not been singled out for unfair funding. There is nothing here to support the victim agenda. Councils in areas with noticeable levels of deprivation, like Hackney and Liverpool, however have grounds for concern about their losses. Compare council ranks in the index of multiple deprivation (LA summaries) and the cuts in the local government financial settlement.

The 2010/11 formula grant is the adjusted figure, that is the grant adjusted to take account of changes in services included in it so that one year can be compared with another. Cornwall will not receive any of the transition grant which will temporarily cushion the drop in funds of some urban authorities.