AN MP has secured a debate in Parliament today on a funding shake-up which it was claimed could cost Sunderland £58million.
Council leaders are fighting Government plans to change the business rates system which they say risk driving jobs and companies out of Wearside and the North East.
The Government will be pressed on the issue today in an adjournment debate secured by Sunderland Central MP Julie Elliott.
She said: “I called for this debate because I am concerned that the government will be leaving the North East behind and creating a postcode lottery of vital council services.
“I want to see real help to promote growth in Sunderland and the North East.”
Ministers are planning a shake-up of council funding from business rates, to make council’s more self-sufficient by allowing them to keep cash rather than relying on Government funding.
At present, the rates are collected and put into a central national pot, before being divided out to councils depending on their need.
The changes are also seen as a way of encouraging authorities to do more to promote business growth in their areas.
But council leaders say the plans could have dire unintended consequences for the North East, which has greater demand on its services while at the same time lacking the booming business sectors of London and the South East.
They fear changes could also see wealthier areas able to drop their rates and attract business away from poorer areas, leading to a “spiralling gap.”
Washington and Sunderland South MP Sharon Hodgson has previously claimed the new system would cost Sunderland £58million in funding – dismissed as nonsense by Ministers.
Sunderland Council leader Paul Watson, chairman of the Association of North East Councils (Anec), said: “We believe that all people of the country should be able to have access to good services no matter who they are or where they live.
“North East local government is also strongly of the view that any new system should provide genuine incentives, and an equal opportunity for all authorities to grow their economies and deliver benefits that can be felt in local areas, as well as the country as a whole.
“There are some significant and far reaching implications arising from the Government’s proposed reforms, that could have a fundamental impact on the growth of the economy of the North East and councils’ ability to fund essential services.
“We are urging the Government to ensure that sufficient time is taken to consider the potential consequences and to secure a fair deal for all authorities.”
Durham County Council leader Simon Henig said: “The Government’s consultation proposals to localise business rates are focused on financial issues and incentivising local authorities to promote business growth.
“Whilst North East councils have economic development at the heart of their activities and are committed to creating the right conditions for businesses to grow, there are significant risks and potential negative consequences from directly linking business rates income with funding for vital public services.”