Council funding shake-up fears

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WEARSIDE is set to bear the brunt of a controversial shake-up of council funding, Parliament has heard.

MPs from across the country cited Sunderland as one of the areas must likely to suffer as a result of proposals to change the business rates system.

Ministers want to make councils more self-sufficient from Whitehall and encourage local authorities to do more to promote growth by allowing them to keep business rates.

At present the rates are collected centrally and dished out to councils depending on their need.

City leaders and MPs have said the changes are hitting areas like Sunderland hard – though ministers have said Wearside would not be left out of pocket as a result.

Now several MPs have highlighted Sunderland plight and raised fears for the future of services in the city if changes go ahead.

Speaking in the latest debate on the issue in the House of Commons, Labour MP Helen Jones said basing funding for services on an area’s ability to raise business rates and council tax failed to take levels of need into account.

The Warrington MP said: “Sunderland, for example, has 34 neighbourhoods that are in the top 10 per cent most deprived areas of the country.

“The legacy of poor health, deprivation and poverty is what many local councils are constantly striving to deal with. There is no lack of effort on their part or lack of will.

“The failure is not theirs, but results from a long industrial heritage followed by the collapse of much heavy industry in the 80s and 90s.”

Graham Jones, Labour MP for Hyndburn, said the proposed changes also posed a big risk to cities such as Sunderland who relied heavily on one big employer.

“Nissan is a very large employer in that region. Who is to say that in five years’ time the company will still be present there?”

Former Sunderland education chief and North West Durham MP Pat Glass said Wearside continued to cope with the challenges it faced.

She said: “Some years ago, I was an assistant director of education in the city of Sunderland and, despite its massive challenges, the attainment of the children was well above that of their statistical neighbours and was close to the national average.

“That demonstrates that such places can have massive challenges but still deliver well for their communities.”

Helen Jones agreed, but said the authors of the proposed changes had incorrectly assumed that councils such as Sunderland did not want to improve things for their communities.

Former Local Government Minister Nick Raynsford said the proposals did include a safety-net system if rate revenue dropped dramatically because of changes beyond a council’s control.

But he said there may also be changes in benefit demand.

He said: “There could therefore be a double whammy. There is no safety net from Government to help local authorities with the second element. Instead, there is only the suggestion that there might be some pooling of risk, which is an unacceptable response to a very serious problem.”

Durham North MP Kevan Jones responded: “There is also no detail as to how the pooling of risk will work, such as whether it will be a voluntary system or enforced by the Government.

“In my region of the North East, Newcastle and Sunderland would probably pool together only if they were forced to do so by Government diktat.”

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