January is usually one of the busiest months for councils as they prepare their budgets for the coming financial year.
This is because the Government doesn’t tell councils how much money they are going to receive until just before Christmas so budgets can’t be finalised until then.
I’ve been leader of Ipswich Borough Council since 2011 and every year our funding has been cut. The Government claims that austerity is over but for councils like Ipswich that’s not the case.
A new raft of Government funding cuts could see us lose another £6m over the next four years.
The Government is planning a radical shake-up of council funding in 2021. There is a huge amount of uncertainty over what they are going to do but it is expected that urban district councils like Ipswich will lose out in a big way.
Under the Government’s “Fair Funding Review” (when this Government says something is “fair” you know it’s anything but!) it is planning to stop additional funding for urban areas with high levels of deprivation and instead give it to wealthy rural areas. It will also take money away from district councils and give it to county councils to try and plug their huge gap in Social Care funding.
Independent advice suggests Ipswich can expect a loss of £1m a year, although it could be much higher.
New Homes Bonus, an incentive scheme for councils to build more houses, is effectively being scrapped after this year. This will cost Ipswich another £400,000 a year.
The Public Works Loan Board (PWLB) is the main source of borrowing for councils. In October last year the Government unexpectedly announced that it was almost doubling the PWLB interest rate. Although this does not affect previous loans it means that developments the council has programmed over the next four years will now cost nearly £2m more than originally planned.
To put the Government’s cuts into perspective, they are the equivalent to an increase in council tax of 14%.
Next week I’ll go into how we are planning to address this cut in funding while still doing our best to protect services.