Communities Secretary James Brokenshire promised a "fairer, more self-sufficient and resilient future for local government" as he confirmed that central government funding for councils will fall once again.

But he was accused by Labour of "battering" Birmingham, as Government figures confirmed funding for city services had been cut by £150 million over five years.

Despite Prime Minister Theresa May's pledge that her Government is "ending austerity", delivered at last year's Conservative conference, the main central grant for local councils will actually fall by £1 billion this year, from £15.5bn to £14.5bn.

At the same time, residents will pay more council tax, thanks to inflation-busting increases.

Labour MP Liam Byrne (Lab Hodge Hill) said: "This battering of our city has to stop and it has to stop now."

The Government has confirmed its spending plans for councils across the country for the new financial year beginning in April.

Figures published by the Ministry for Housing, Communities and Local Government show the main government grant for Birmingham City Council is to fall by £27 million, from £489m last year to £462m in 2019-20.

That's down from £612m in the 2015-16 financial year, a cut of £150m over five years. The figure will be higher in real terms because of the effect of inflation.

Meanwhile, Birmingham residents are expected to pay £350m in council tax in 2019-20 - up from £327m last year and £271m in 2015-16.

The authority also receives other government grants, including a £60m fund to help pay for social care.

But overall, central government funding has fallen while the tax paid by local residents has increased.

 

Birmingham City Council's total budget, known as its spending power, is £907 million in 2019-20 - the same as it was in 2015-16.

But when you take into account the impact of inflation, that amounts to a real-terms cut.

Other local councils have been hit in a similar way.

Inquiry says Government is "in denial" about funding crisis

And an inquiry concludes today that the Government is in denial about the scale of the crisis facing local authorities.

The House of Commons Public Accounts Committee, whose members include Birmingham Ladywood MP Shabana Mahmood, warned in a report: "Some councils are now in an extremely worrying position: overspending their budgets for social care, reducing key services, falling back on financial reserves and increasingly relying on generating other sources of income, which comes with greater risks."

Local Government Secretary James Brokenshire

The MPs said that the financial position of councils "is continuing to deteriorate as demand for vital services increases", but Government appeared to have no idea how it would help them cope.

They said: "Disturbingly, there is still no sign that the Department has a clear plan to secure the financial sustainability of local authorities in the long-term."

And the MPs also warned that councils were forced to allocate an increasing proportion of their resources to services they are obliged to provide by law, including adult and children’s social care, while others, such as libraries and youth services, are neglected.

Government says total funding is increasing

Mr Brokenshire highlighted Government plans to allow councils to raise more of their own money by retaining business rates paid by local employers.

In the past, these were received by the Treasury and distributed across the country, forming part of the central government grant. But councils are increasingly being allowed to keep a larger share of whatever they collect, on the grounds that this will give them an incentive to help local economies grow.

He said: "Local authorities will have more control over the money they raise and a real terms increase in their core spending power."

Some Labour critics say the policy means areas with the strongest economic growth will eventually receive more funding, but areas with weaker economies are more likely to experience deprivation and may need the money more.

Labour says life is getting harder for Birmingham residents

Labour MP Liam Byrne told the House of Commons: "This Government have given us a slower recovery than after the great depression. What that means in Birmingham is that it is harder to earn a good life than ever before.

"The employment rate in our city is now lower than it was before the great depression.

Liam Byrne MP
Liam Byrne MP

"In some parts of the West Midlands today, people are now earning 9% less than they did in 2008.

"The ladder in life is harder to get on to because apprenticeship numbers in the west midlands have fallen by a third. That is 10,000 fewer apprentices in our region over the last year."

Funding for West Midlands councils

Council Grant 2015-16 Council tax 2015-16 Grant 2019-20 Council tax 2019-20
Birmingham £612m £271m £462m £350m
Dudley £122m £97m £85m £124m
Coventry £137m £102m £97m £134m
Sandwell £177m £80m £134m £103m
Solihull £56m £85m £32m £106m
Walsall £129m £94m £91m £123m
Wolverhampton £137m £81m £101m £104m

The core grant for local councils is known as the “Settlement Funding Assessment”. This includes the Revenue Support Grant, which comes directly from central government, and money local councils are allowed to keep from business rates.

As the local share of business rates has been fixed until 2020, any changes to the Settlement Funding Assessment can only be applied to the element of funding that is provided through Revenue Support Grant.