Cash blow prompts services fear

HOUSEHOLDERS were last night warned to expect a “devastating impact on services” combined with a big increase in council tax after the Government was accused of starving Suffolk and Essex of cash support.

By Graham Dines

HOUSEHOLDERS were last night warned to expect a “devastating impact on services” combined with a big increase in council tax after the Government was accused of starving Suffolk and Essex of cash support.

Essex has received an increase of just 2% in Whitehall grant next year, compared with 6% this year, while Suffolk has fared better at 2.9%.

However, these are higher than the 1.7% which had been forecast last month by council leaders.

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For the first time, councils have also been given notice of the increase for the following financial year. In 2007-8, Suffolk will get 5% and Essex 2.7%.

Councillors immediately rounded on the Government, accusing it of forcing local authorities to axe services to keep their spending within reason.

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But Labour MP Chris Mole said the settlement was fair and that there should be no need for a significant rise in council tax.

Jane Storey, Suffolk County Council's portfolio holder for Resources, Finance and Performance, said: “It is devastating news for the council tax payers of Suffolk. The settlement is much lower than central government has given us in previous years. It will have serious implications for the provision of services, and leaves us with some very hard decisions to make.

“There is a real trade-off to consider between the level of council tax increase and the impact on the services we deliver. The implications are that we will need to maximise efficiencies and consider service reductions in order to deliver an acceptable council tax increase.”

Council leader Jeremy Pembroke, who two weeks ago warned staff that job losses would be inevitable if the settlement was low, said the grant “is not enough to meet the growing demand for services.”

He added: “We will now have to consider carefully how best we can meet the needs of Suffolk residents, whilst keeping council tax rises to a minimum.”

Lord Hanningfield, leader of Essex County Council, said: “It is not a disaster but we don't really know quite how it will impact on us and the council tax until we have done a lot more work on it.

“Until we get the education grant we just don't know at all because although that money goes direct to the schools we still have to provide the support services.”

He confirmed two of the council's main financial worries were covering costs of care for the elderly and waste disposal.

David Finch, the council's cabinet member for finance, said a clearer picture of exactly how much would be received would become apparent in the coming weeks.

“The grant settlement was more or less in line with what we expected but I would say the devil is in the detail and the full extent of the settlement is yet to be evaluated because it is not coming out as one grant.

“It could be two weeks before we have the full picture for Essex.”

He added the council would be better equipped to plan ahead because it knows what to expect for its grant for 2007-8.

Simon Burns, Tory MP for West Chelmsford, accused the Government of using local taxes as a means of “filling in the black hole” in public finances.

“The Government are piling obligation on local councils, like ours in Essex, while depriving them of funding from other taxes.

“Essex County Council has done a tremendous job in making efficiency savings but the council now faces tough challenges to meet the kind of pressures being put on them by central Government.

“Taxpayers in Essex receive only 66p for every £1 they pay in tax, and funding for public services, at less than £5,500 per person, is well below the national average of £7,200 per person. It is discrimination and an outrage.”

However, Ipswich Labour MP Chris Mole, who is Parliamentary Private Secretary to Local Government Minister Phil Woolas, said the increase that Suffolk had received was twice the rate of inflation. “I think it is absolutely a fair settlement in the economic circumstance. The 5% the following year is very generous.

“There has been a range of above inflation increases over the past 10 years, which compares with the cut in real terms inflicted by the last Tory government when I was leader of the County Council. There was no justification for Tory councillors, before this week's announcement from the Government, to worry staff over job cuts, and there should be no large rise in council tax.”

Mr Woolas told MPs in a Commons statement: “This is another good settlement for local government and reflects the work we have this year undertaken jointly with the Local Government Association to look at the pressures councils face in the next two years.

“For their part, councils are expected to budget prudently and generate efficiency gains. For our part, we will be working with the LGA to address spending pressures, including a focus on pay, adult care, and waste disposal.”

But Reg Hartles, chairman of the Protest Against Council Tax Suffolk, said: “If the county council are very concerned about this settlement, then council tax payers must be too.

“Our attitude to council tax will not waiver - we will continue to keep an eye on it and do whatever we can to get something done about it.

“We always hope to see rises kept to the rate of inflation, but we have had some very large increases in council tax over the last few years.”

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