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Major Birmingham funding cuts confirmed as urban areas hit hardest

Birmingham is expecting to be among the worst hit by the cuts which it is claimed have a greater impact on major cities and urban areas

Birmingham City Council

Councils and town halls up and down the country are facing average cuts of 1.8 per cent in central government funding next year it has been announced.

But Birmingham is expecting to be among the worst hit by cuts of more like six per cent, which it is claimed have a greater impact on major cities and urban areas.

Local Government minister Kris Hopkins told MPs that councils would still have ‘considerable spending power’ under the funding agreement, before adding that no single council will lose more than 6.4 per cent of its spending power in 2015/16.

Councillor Sir Albert Bore, leader of the council said Birmingham was, as expected, set for cuts of about £100 million.

He said: “The figures are broadly in line with what we were fearing, so we will still need to make the level of cuts that  were set out recently in our White Paper. I am extremely disappointed that the Government has not responded to Birmingham’s proposal, which had cross-party support, for a fairer approach to the distribution of grant cuts.

“The cuts confirmed today are equivalent to almost £160 per dwelling and the cut is the greatest of all eight core cities in the country. This essentially echoes the warnings we issued when our budget white paper was published last week.

“We are currently consulting on a series of budget proposals, and will need to consider in the New Year how best to respond to the comments which people make and also the implications of today’s Government announcement.”

The majority of bulk of local authorities’ spending power comes from grants from central government, with around a quarter raised from council tax. By contrast Birmingham, with high levels of deprivation and a proportionately low number of high value properties, raises just eight per cent of its funding from council tax.

Tory minister Mr Hopkins said: “In the context of this unprecedented challenge to public finance we have yet again delivered a settlement that is fair for all parts of the country, whether North or South, urban or rural.

“English local government is expected to spend over £114 billion this year, around a quarter of all public spending.

“This settlement therefore recognises that local authorities continue to make a vital contribution in helping pay off the deficit.

“Once again the settlement leaves councils with considerable total spending power, as planned we have kept the overall reduction to 1.8 per cent - lower than last year and one of the lowest levels of reduction under this Government.”

He added that council’s facing the highest demands for services will receive more funding.

Birmingham City Council last week announced plans for a £117 million cut in spending on services in 2015/16. Of which £72 million were new cuts resulting the loss of about 1,100 jobs. Finance chiefs, who are today looking at the Government figures, do not expect this to change significantly following the Government announcement.

Speaking at a budget consultation event at The Mac in Cannon Hill Park, council leader Sir Albert Bore said: “The £117 million in cuts to come is on top of £462 million in earlier cuts.

“We have looked at everything we do as a council to see where we can make cuts. We’ve got a big challenge ahead of us – we need to find new ways to deliver services.”

The national body representing town hall bosses, the Society of Local Authority Chief Executives and Senior Managers (SOLACE) warned councils are at breaking point.

Solace director Graeme McDonald said: “This settlement reminds us that the financial challenge facing local government is immense. Cuts of up to 6.4 per cent will push some authorities to breaking point.

“Government is beginning to recognise that councils have led the way on deficit reduction, but with cuts and demand increasing, fragility is beginning to show. The financial future of local services is

unsustainable without a more ambitious plan for public service reform.”

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