Poor areas hit hardest in cuts to council funds

The biggest cuts to police and local councils "in living memory" were yesterday unveiled by ministers with some parts of the country losing almost 10 per cent of their budget in a single year.

Inner city areas of Liverpool and Manchester and parts of London including Hackney will be worst hit with spending reductions of 8.9 per cent. However richer parts of the country such as Surrey, Buckinghamshire and Wiltshire fare much better with cuts of less that 1 per cent.

The Tories claimed that, per head, the poorest parts of England were still getting up to 10 times more from the Government than the richest areas. But Labour said it was clear that the brunt of cuts would be felt by those people least able cope. Independent experts said the scale of the cuts were the worst "in living memory" and would affect services for everyone.

On average councils face cuts in "spending power" of 4.4 per cent next year while the Local Government Association, which represents local authorities, said this amounted to a total funding shortfall of £6.5bn next year.

Many councils have already announced job cuts and many more are expected in the new year now the full extent of the cuts have become clear. Overall, more than 100,000 jobs are expected to go.

Police forces in England and Wales will also be hit with cuts in central funding of 4 per cent next year. The budget for Olympic security will be cut from £600m to £475m.

The Association of Police Authorities said it could stall progress on crime reduction. The Shadow Home Secretary, Ed Balls, called the cuts "very reckless".

Announcing the funding cuts in the House of Commons, the Communities Secretary Eric Pickles said he had created a transition fund for two years to ensure no council would face cuts of more than 8.9 per cent. He said the Government's Localism Bill, also published yesterday, would mitigate the cuts by allowing councils far more power to choose where they spent their money.

"This will be a progressive settlement and fair between different parts of the country," he said. "Taxpayers are no longer prepared to write a blank cheque for the public sector. But they do want less interference in their local communities from Whitehall government. So the Coalition Government is delivering the most significant shift in power from officials in London to elected local councils in a generation.

"While resources are tight in the current financial climate, council freedoms are not. Councils now have unprecedented freedoms over how to prioritise their money. The need to reduce public spending means that this is a unique settlement, but also a unique opportunity for councils to show how efficient they can be, root out the wasteful spending that still exists and ensure that money goes to the frontline public services."

But Shadow Communities and Local Government Secretary Caroline Flint MP said: "All Eric Pickles' warm words about transitional funds can't disguise the truth – the poorest neighbourhoods will be hardest hit while the better off will do best as a result of to the choices the Coalition Government are making."

Margaret Eaton, chairman of the LGA, said everyone would feel the pain of the cuts. "We have been clear that the level of spending reduction that councils are going to have to make goes way beyond anything that conventional efficiency drives, such as shared services, can achieve. We have to face the fact that this level of grant reduction will inevitably lead to cuts in services.

Lady Eaton said: "Councils now face incredibly tough choices about the services they continue to provide and those they will have to cut."

Tony Travers, from the London School of Economics, said the cuts would be the worst since 1945.