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Finance Settlement from Tory Government will make front line service cuts inevitable

I don’t know much about Eddie Pole and George Wyle, the duo who penned the Andy Williams hit “It’s The Most Wonderful Time Of The Year”, writes Labour Leader of Ipswich Borough Council, David Ellesmere, but my guess is that they didn’t work in local government.

For councils, late December is always associated with the annual Christmas present from the Government of the “Local Government Finance Settlement” - how much money councils are going to get for the next year.

By “present”, I am talking in the sense that an untrained dog leaves a “present” on your best carpet: it’s pretty unpleasant and can take a long time to clear up the mess.

We weren’t expecting good news. It’s a long time since we've had that.

When the Conservatives and Liberal Democrats were running the council they always used to moan that the increase they got from the Labour Government wasn’t big enough. Now we can only dream of such a Golden Age when our funding was actually being increased.

So we were expecting cuts and had a savings programme in place for how to deal with them.

Indeed we had signed up to the Government’s plan for a four-year funding agreement - with cuts in each of those four years of course - so that, in the Government’s words, we had “certainty” and could plan ahead.

It was going to be tough but we could see away through. At the end of four years we still had a balanced budget and were pretty certain we could still protect frontline services.

Then came the Social Care Crisis and the Government’s panic reaction to it.

Most of the attention has focused on proposals to raise council tax but, also announced, was an extra £240 million for social care. This money is being taken directly from district councils like Ipswich, Babergh and Suffolk Coastal.

The way the Government is doing this is through cuts to the “New Homes Bonus”.

This is a scheme the Government set up to encourage councils to build more houses. For each new home built in an area, the Government effectively matches the council tax raised for six years, - around £1,600 a year in Ipswich. This year we received £2.25m in New Homes Bonus.

The Government had already told us they were going to cut the scheme. Instead of six years, the bonus would only be payable over four years. This will cut the amount we receive by a third at a stroke. We knew this and were planning for it.

What we weren’t planning for was a further raid on New Homes Bonus.

The Government has now decided that a certain number of homes will always get built anyway so councils shouldn’t be “rewarded” for them. In Ipswich, for the first 240 homes built every year, no New Homes Bonus will be paid at all.

This means an immediate cut of £250,000 next year. The year after, we lose £500,000 and the year after that £750,000. Over the next four years we now have to find savings of £2.5million on top of the millions of pounds of savings we were already planning to make.

I’ve got to be honest. At this point in time I don't know how we’re going to do that.

Unlike the Government, we don’t have to panic as we can plan the savings over four years.

But it is highly unlikely that we can make this level of savings and still protect services. We need to recognise that, from now on, services we have taken for granted may get worse or may be cut altogether and that prices will increase.

Happy Christmas everyone!

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