Settlement threatens jobs and services

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The Independent Online
MORE than half of the 400 councils in England will be able to increase spending by less than inflation next year - leaving many facing cuts in services and job losses, local authority associations have calculated.

Preliminary assessments of last week's council settlement show that 40 district councils face cash cuts of up to 5 per cent - before any pay awards or allowance for inflation, according to the Association of District Councils.

Another five face a freeze if they are to avoid capping, and 45 more will be allowed increases of 1.5 per cent or less - when the Government's target for public sector pay is 1 to 1.5 per cent.

John Blundell, under-secretary for finance at the ADC, said that for those 90 districts 'we would certainly challenge the Government's view that there will not have to be cuts to avoid capping'. Unless the districts had cash in the bank they could use to maintain spending, those councils 'will have to make some sort of real term cuts, even if there is only a 1.5 per cent pay award'.

Mike Grealy, finance under-secretary at the Association of County Councils, said their figures showed that 246 out of 419 authorities - nearly 60 per cent - have capping limits that allow increases of 2.5 per cent or less - below the Government's own estimates of the impact of inflation on government of 2.75 per cent. He said that, for many, that would mean 'service reductions and job losses', even with a pay freeze, because councils are already committed to pounds 350m in extra pay and national insurance.

Thirteen of the 39 counties, among them Conservative-controlled Somerset and Warwickshire, will be allowed only a 1.75 per cent spending increase to avoid capping, while 31 out of 36 metropolitan authorities outside London look to have increases of 1.75 per cent or less, as do 13 out of 32 London boroughs.

No counties or metropolitan districts face cash cuts, according to the calculations, but it is these authorities which have the statutory responsibilities for services such as education and social services where internal pressures - more schoolchildren or elderly people - can generate extra spending.

The figures demonstrate how critical it will be for local government jobs and services that the Government's near pay freeze holds. If it does not, council finance officers predict that they will be 'in really deep trouble'.

Council tax levels are likely to range on average in England from pounds 350 in band A - houses worth up to pounds 40,000 - to pounds 1,044 on average in band H for houses worth over pounds 320,000, according to estimates produced by the Association of London Authorities. However, some councils are likely to have much higher figures.