How will we plug a £52m funding gap?

Lord Smith
Lord Smith

Wigan Council’s leader has backed calls for local government to receive a funding boost.

And Lord Smith said he was particularly concerned about the borough’s being vulnerable to further cuts in three years’ time.

The authority chief was speaking after the head of the Local Government Association Lord Porter demanded that cash-strapped councils be at the “front of the queue” if austerity is coming to an end.

The way councils are funded is set to change radically in the coming years with grants from central government drying up while town halls will keep all the money they raise through business rates rather than handing them over to Whitehall for redistribution.

Wigan is one of the authorities piloting this change and has been assured that it won’t be out of pocket during the duration of the trial.

But after 2020 is a different matter. And if there is still a government in charge continuing to enforce austerity measures, Wigan Council could be in big trouble, the leader said.

Wigan has already had to make more cuts to its budgets than most other councils and will have shed £160m by 2020.

And, as Lord Porter pointed out, in three years’ time local government in England will have lost 75 pence out of every £1 of core central government funding that it had to spend in 2015: money used to pay for services like bin collection, pothole repairs, protecting children and caring for the elderly and disabled.

Lord Smith said: said: “I very much support Lord Porter in calling for local government to be properly funded. At Wigan Council we have been able to maintain the services that matter to residents and balance the books by working differently with our communities through The Deal.

“However the on-going uncertainty in how councils are to be funded is very concerning.

“Retaining 100 per cent of business rates will not be enough for Wigan as this leaves us £52m short and requiring a top-up grant from central government.

“This makes us vulnerable to any further government cuts beyond 2020.”

And Chancellor Philip Hammond does not seem minded to stop austerity yet, given his latest statements.

All Association of Greater Manchester Authorities members are piloting the shift to 100 per cent business rate retention and the scrapping of revenue support grant, but details remain hazy. A council audit scrutiny paper earlier this year stated: “As no information has yet been released we are not in a position to determine how this will affect Wigan Council at this stage.

“However, the government has confirmed a no detriment position for any local authority in a pilot area. Wigan Council is extremely keen to be involved in the pilot ahead of the national implementation in order to shape it and have a greater say in its delivery and impact. This is seen as extremely significant given the critical role business rates will play in the council’s funding from 2020.”