Minister in pledge over council cash

Sunderland City Council leader Paul Watson (left) with Simon Henig, leader of Durham County Council, outside the Houses of Parliament.

Sunderland City Council leader Paul Watson (left) with Simon Henig, leader of Durham County Council, outside the Houses of Parliament.

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A GOVERNMENT minister has promised not to cut support for Wearside and Durham in a shake-up of council funding.

Council leaders launched a campaign to safe-guard services after a new report found proposals to make local authorities more independent could have dire unintended consequences for less-wealthy parts of the country.

The Association of North East Councils (Anec) is concerned that plans to link council cash with the amount an area raises in business rates will make “the rich get richer” while less-wealthy areas such as Sunderland get poorer.

But Communities Minister Bob Neill said this would not be the case.

He said: “The Local Government Resource Review is considering options to enable councils to retain their locally-raised business rates that will allowing them to break free from dependency on central Government funding.

“We will set out proposals shortly for consultation. We are absolutely committed to providing effective incentives for all authorities – of all types and in all areas – to benefit from delivering growth.

“We have made clear that more deprived areas will continue to benefit from Government support.”

The Government says it wants to change the system of council funding to give local authorities more freedom, and make themless dependent on Government funding.

Ministers believe closer-linking business rates raised in an area to councils’ spending power will encourage towns and cities to do more to support business growth.

The present system sees business rates collected locally and put into a central pool, redistributed to councils depending on their need.

Council leaders recognise the system could be improved, and there advantages in incentives which would allow poorer areas such as the North East to keep increase rates from business growth.

But they fear changes could mean deprived areas with more need for services being left with less funding to pay for them.

North East councils are also concerned that changes could allow affluent councils to drop their rates to attract in businesses.

They fear councils such as Sunderland could not afford to compete, and would both their economies and services suffer.

The Government has said there will be checks and balances in place to stop such situations, but council leaders say the “devil will be in the detail”.

Sunderland City Council leader and Anec chairman Paul Watson said: “The playing field is not level and we would urge the Government to explore with us alternatives to stimulate a strong economic future for all areas of the country.”

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