Government hands Durham County Council a huge funding boost

At last month's meeting of the county council's Corporate Overview & Scrutiny Management Board (COSMB) I noted the downbeat nature of the cabinet's latest budget report in which the Reform UK leadership in county hall laid out its latest plans to set council tax and also decide on any levels of cuts and borrowing. 

From the tone of the cabinet's report it was almost as if the council was facing some kind of catastrophe as a result of the latest local government finance settlement. To make matters worse there was an alarming naivety from cabinet members who complained that the council still faced a deficit despite a record increase in funding.

It's an established fact that no local authority has ever had its deficit written off as part of an annual funding settlement. That isn't the way council funding works. Whether we like it or not governments have always issued its funding settlement to councils predicated on the assumption that the council raises its council tax by the maximum amount permissible to plug any gap in funding. This is largely what constitutes the council's Core Spending Power (CSP). It is then for each local authority to cut its cloth accordingly and balance the books as best they can within the limits of the funding raised. It might not seem fair but that's the way things have always worked in local government funding.

It should be noted here that during the last 14 years of punishing austerity the council was forced to deal with combined cuts to budgets and public services of around £300m. For the Reform leadership to now claim they should be considered an exception to the rules that have applied to every other administration is astounding in its naivety, and shows that Reform simply hasn't grasped even the most basic elements of running a council.

In stark contrast to the last generation of Tory-led austerity and savage cuts to local council funding what we have this year is a significant uplift in funding of over £50m over 3 years (rising to over £82m over 4 years based on the cabinet’s own assumptions). This is supplemented by an additional £4m from a carry-over of the Extended Producer Responsibility grant, an extra £1m from the Triennial Review of the Pension Fund and even more from an extension of the government's Recovery Grant. In addition, for the first time in years, the council has been handed a three year funding settlement that gives them the freedom and the flexibility to plan ahead over the term of the MTFP period (in contrast government funding settlements until this point have been allocated on a single year basis, making it virtually impossible to plan ahead).

Finally, the government announced just last night (Tuesday 10 February) that they are handing the council an additional £3.7m to help plug a gap in its CSP. £3.7m is the equivalent to the amount of money that can be raised by increasing council tax by 1%

Compared to the previous 14 years of austerity the cabinet is today wading waist high through an embarrassment of riches, awash with options when it comes to setting the budget and deciding their council tax levels and spending plans alongside any cuts to services and borrowing levels for the next few years. 

Reform promised on their election leaflets last year to 'cut taxes', 'fix' cuts to services, 'cut energy bills' and 'fix' the council's debt. In that context alone the government has handed them a golden opportunity to deliver on their election pledges and give the residents of County Durham some much needed respite after suffering for many years under a deeply damaging austerity programme unleashed by the Tories - many of whom have since jumped ship and are now swelling the ranks of Reform! 

In recognising the significant increase in funding the council has been handed this year residents will expect the cabinet to make the right choices in delivering on last year's local election promises. The government's gift of a hugely significant uplift in funding gives the cabinet the luxury of having options and the perfect opportunity to stay true to their word to cut taxes, reduce the debt and cut energy bills. Anything less would be seen by the people of County Durham as a betrayal of trust.

**COSMB will meet again tomorrow Thursday 12 February to consider the cabinet's latest budget plans prior to all members making the final decision on council tax levels and the budget at next Wednesday's meeting of full council.