From The Argus –
Council leader Warren Morgan has warned the upcoming budget will mean cuts will “really start to bite” on front-line services.
Cllr Morgan spoke after his council reluctantly agreed to having their Government funding slashed by more than 80 per cent.
The four-year fixed funding settlement will see the council’s revenue support grant, a key source of council revenue, reduced from £33.1m to £6.5m by 2020.
It comes as councils across the country prepare to lose the grant but in return they could retain all of their business rates after 2020.
In theory, the move could eventually net the city council an additional £60 million annually but the Labour leader warned about the difficulties the council was facing in bridging the budget gap in the meantime and the uncertainty surrounding the plans.
He said the reform could lead to little net benefit because of a rates revaluation next year leading to increased appeals, a government promise of a full rebate for small and medium-sized businesses and further Treasury signals that more costs and responsibilities will be passed to councils.
But Conservative councillors said the business rates proposal, in exchange for the end of central government grants, would allow councils to become self-sufficient rewarding authorities that helped businesses to grow.
The settlement will see the revenue support grant drop from 15.8 per cent of net council spending in 2016/17 to 3.2 per cent by 2019/20.
While the grant reduction will result in a £4 million drop in total funding because of rising council tax and business rate receipts, Cllr Morgan warned rising demographic and inflationary pressures will cost the council £15 million a year.
He told The Argus “After six years of cuts by the Conservative government, this will be the year when cuts really start to bite on front-line services.
“What the council spends does not stand still.
“Our wage costs will grow we predict by around £10 million, our social care costs are increasing by far more than the rate of inflation or the money generated by the social care precept.”
Conservative group leader Geoffrey Theobald said the move towards 100 per cent business rate retention was the key to the council becoming financially self-sufficient.
He added: “Our challenge is to ensure that we are a business friendly city with a well-trained workforce, and world-class infrastructure to attract inward investment.”
His party colleague Andrew Wealls added: “I’m confident that, even with an equalisation process, the government will want to reward cities which respond by building up business in their areas. That’s the whole point.”
Green councillor Ollie Sykes said: “I don’t we should take acceptance of this paper as acceptance of the policy that lies behind it, the catastrophic policies of this government and previous governments in robbing local authorities of the lifeblood of their public services.”