MP warns business rates shake-up could rob Sunderland of a ‘devastating’ £58million

Sharon Hodgson MP.

Sharon Hodgson MP.

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WEARSIDE could lose a further £58million-a-year in funding for public services under planned Government changes, claims a Sunderland MP.

Ministers are proposing a funding shake-up to make councils more independent from central Government, with a key focus on altering the business rates system.

Council leaders in the North East have already launched a campaign to make sure poorer areas such as Sunderland do not lose out while wealthier areas get richer.

The Government has promised councils will not receive less funding than they did before – but council leaders say the devil will be in the detail.

Washington and Sunderland West MP Sharon Hodgson says she has calculated that the city will lose up to £58million a year if the changes go ahead.

She said: “We’ve already seen deep cuts to our council’s funding from the Tory-led Government.

“Unless ministers now spell out clearly how they will ensure we don’t lose out, we could be in line for yet another devastating blow to local services.”

Under the present system, business rates are collected locally and put into a national pool. The cash is then allocated to councils depending on their need.

The Government is looking at ways of more closely linking business rates with council funding.

Some fear the new system will see funding too closely linked to what each council collects in business rates.

The Association of North East Councils released a report last week claiming such changes could have dire unintended consequences for poorer regions.

Mrs Hodgson said while areas such as Sunderland lose out, Westminster Council – home to the some of the world’s biggest businesses, shopping streets and tourist attractions – would get to keep the £1billion it contributes to the national pool.

Sunderland City Council and other authorities in poorer areas require more funding as they have more residents in need of services than wealthier parts of the country.

The city also generates less in business rates than richer areas.

Mrs Hodgson said: “If Sunderland loses out on the funding it gets from the national pool, it could mean a significant reduction in the services it offers our community, including attracting new businesses and jobs to the area.”

Communities Minister Robert Neill rebuffed such claims.

He said: “The Government has been clear that any proposals will ensure that all councils will have adequate resources to meet the needs of their local community.

“As the Deputy Prime Minister recently said to the Local Government Association’s annual conference, no local authority will receive less funding when the new arrangements are introduced than they would have done under the previous funding system.”

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