The Government is giving away with one hand what it is taking away with the other, the LGA said this week following the announcement of the Comprehensive Spending Review.

The CSR is as tight as was feared, with just a 1% growth in real terms over the next three years – down from a 3.9% average over the last ten years –  and the minimum figure the LGA said local government needed.

But the rise has been cancelled out by cuts to LABGI, director of finance at the LGA, Stephen Jones told The MJ.

The Treasury tried to sweeten the blow of the meagre settlement with a reduction in ring-fencing, and freedoms to raise supplementary business rates.
There will also be a one-off cash payment of £150m to help councils make efficiency savings – but in return, the Government expects cash savings of £4.9bn.
Communities and local government secretary, Hazel Blears, told The MJ the settlement was ‘tough but fair'.


‘We are asking local government to make extra savings for local government. If you ask people to make changes year on year – I recognise that it is a challenge – but I do believe it can happen.'

She said the cut to ring-fencing was ‘really quite significant. The LGA has been banging on about this and we have delivered on it. This should give local government the power to spend money on the issues that matter most to local people.'

The Government also announced the cut to performance indicators from 2000 to 198. ‘People didn't believe that we would be able to do this, but we have. It's up to you to negotiate,' Ms Blears told local government. The £50m cash pledged for business start-ups under LABGI is down from £1bn over the first three years – which Mr Jones said equated to the 1% increase in real terms.

He claimed changes to ring-fencing and cash for efficiency improvements ‘takes some of the nasty taste left by the settlement away'.

Plans for the SBR have also been attacked by London borough bosses.

Chair of London Councils, Merrick Cockell, said he was ‘dismayed' the Government had ‘scrapped plans for a consultation on this', and gone straight to a White Paper. ‘In London, we are concerned the power will rest with the greater London Authority, rather than with the boroughs.' A total of £5bn ring-fenced grants will be mainstreamed through revenue support grant or area-based grant – or cash to Local Area Agreements.

Local government minister John Healey described it as a ‘fair and affordable settlement for local government in a tight spending round. We have delivered the core demand from LGA – a 1% real terms increase in funding.'

She stressed this was not a gimmick but an ‘integral part of the direction for the new relationship between central and local government'.
Mr Jones agreed the settlement was ‘tough' but he added: ‘Is it fair for older people? Is it fair for councils? We don't think so.'