Response to local government finance settlement

By on 18/12/2014 in Leader, News

The Government has today announced the Provisional Local Government Finance Settlement for 2015/16. This included the core grant figure which the council will receive in the next financial year, together with information on the level of Council Tax increase above which a referendum will be required.

Birmingham City Council will experience a reduction in core grants next year of over £100m, which is broadly in line with previous expectations. As confirmed recently by the National Audit Office, the Government is cutting back the resources for those councils which are more dependent on grants by a greater proportion. Birmingham’s reduction in Spending Power in 2015/16 will be 6.0% (£156.77), compared with an English average reduction of 2.1% (which equates to £47.47).

The Government has announced that proposed Council Tax increases of 2.0% or more will require councils to conduct a referendum to seek approval from members of the public, and the City Council will now consider its position in the light of this, and also public comments received in response to the budget consultation White Paper.

Sir Albert Bore, Leader of the Council 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.â€


1. The announcement today sets out provisional figures for next year, which are subject to a period of consultation until late January/early February. Final figures will be announced at that stage.

2. A variety of specific Government grants will be the subject of separate announcements from the individual Government departments concerned over the coming weeks.

3. “Spending Power†is a concept which has been introduced by the Government as a measure of the total resources available to councils – including core Government grants, Council Tax income and the locally retained proportion of business rates. (Note: Government is using an English average figure of -1.8% for 2015/16, which excludes the Greater London Authority).

4. Birmingham’s proposal is that the allocation of grant cuts should be pro rata to total overall resources (including Council Tax), so that all authorities experience the same proportionate cut in their resources, and those more dependent upon Government grants do not experience a greater percentage reduction.

5. The Council’s budget consultation White Paper was published on 10 December 2014, with there being an opportunity to make comments on the proposals until 12 January 2015. Individual savings proposals may also be the subject of more specific consultation with stakeholders.

6. The Council’s budget for 2015/16 and Council Tax will be considered at the Council meeting on 3 March 2015.

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