Thursday, 13 January 2011

The Cuts and Hackney - the full picture

Hackney Council has now received details of its central grant funding for 2011/12 and 2012/13.

In 2011/12 our core central government grant will be cut by £33 million and – removing the one-off transition grant which covers no more than the costs of making the cuts we face, and the money ‘given’ to the Council from the NHS budget and taking into account the end of a number of social care grants – we are facing a reduction in central funding of £44m for the next financial year. This represents a cut of 14.9% in the Council’s grant funding.

This cut is significantly higher than the headline figure of 8.9% announced in December by Eric Pickles, the Local Government Secretary, and the 7.25% announced by George Osborne in the Comprehensive Spending Review. It is also significantly higher than the cuts faced by other more affluent areas – across the country the local government settlement has favoured rich areas at the expense of poorer ones.

The mayor, cabinet and Labour councillors have already agreed a package of spending reductions amounting to £23m. Whilst having a serious effect, these cuts will largely not directly impact on the Council’s front line services. For example, as part of these reductions the Council will lose approximately a third of its director and senior manager posts.

Due to £4m of additional unavoidable cost pressures, this leaves the Council needing to cut another £25m from next year’s spending. The majority of this – and the biggest impact - will be made up of the ending of specific grants totalling £17m. These grants are for third-sector and voluntary projects and are funded through partnership arrangements. The funding for these projects will therefore come to an end. The mayor has said that he would like some of these projects to be picked up by the Council but clearly the scope for doing so will be extremely limited.

The remaining deficit, after some technical savings, is about £5m. Later this month Labour Group will consider how this can be bridged. Legally, the Council has to set its 2011/12 budget by March 11th. If it does not do this, the Coalition Government will set its budget for it.

While we may be able to avoid further direct cuts for 2011/12, for 2012/13 we face a budget gap of about £25m. It’s difficult to see where this will come from except through direct cuts to services.

There will be further cuts to our funding in 2013/14 and 2014/15 but these are yet to be announced and the government is currently undertaking a review of the overall structure of how money is distributed to local authorities.

If you want more details, you can find them here on the council’s website.

As always please do get in contact if you have an questions or comments.

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