A war of words has erupted between the most senior officials at the DCLG and their counterparts at the Local Government Association (LGA) over ‘confusion' and ‘anger' at how the spending round settlement for 2015/16 unfolded – it has emerged.

The MJ has obtained a terse exchange of letters between DCLG permanent secretary, Sir Bob Kerslake, and chief executive of the LGA, Carolyn Downs, which exposes the sector's concerns with the complexity for council funding allocations in the first year of the next spending review period.

In a letter dated 8 October, Sir Bob wrote to Ms Downs, seeking to explain the facts behind the local government finance consultation that the DCLG published on 25 July.

‘There have been suggestions among some in local government that DCLG somehow altered or worsened the settlement following the spending round, that we did not set out the details clearly and honestly, or that we deliberately released information just before recess,' Sir Bob wrote.

His letter first reconfirmed the 2013 spending round announcement that local government faces a 10% cut in real terms to Departmental Expenditure Limits (DEL) – which covers running costs such as wages, and ongoing operational costs.

Sir Bob then explained how the Treasury arrived at the figure for 2.3% spending reductions.  This incorporated the establishment of a £3.8bn pooled fund to integrate health and social care, the council tax freeze grant money and anticipated £1.1bn New Homes Bonus cash – including the £400m controversially hived off to Local Enterprise Partnerships.

Sir Bob defended the DCLG local government finance consultation – a technical assessment which reduced the funding settlement by 14.6% in real terms.

He claimed this is a larger reduction from the stated 10% figure due to ‘a wide variation in the level of funding for different parts of the local government DEL'.

On the same day, Helen Edwards, DCLG deputy permanent secretary and director general for localism wrote a letter outlining the exact same points to organisations including the District Councils' Network, the Society of Metropolitan Chief Executives, the Association of County Chief Executives, London Councils and SOLACE.

LGA chief executive Carolyn Downs responded on 10 October that the three separate figures cited for council cutbacks showed how hard it is for councils to make financial assessments.

‘The fact that your letter required three pages to explain the differences between these figures underlines the complexity in the local government finance system which breeds confusion and, in our view, undermines local accountability,' Ms Downs wrote.

‘It was clear from very early on that councils were confused and in some cases angered by the figures in the settlement consultation,' she later added.