Councils in Berkshire and Bucks stress concerns over impact of Fair Funding Review 2.0

Councils in Berkshire and Bucks have stressed their concerns over the impact of plans to direct more funding to deprived areas across the country.

The Government is consulting on its Fair Funding Review 2.0 which looks to introduce a funding system which sees money targeted towards areas of need.

The approach looks to take into account the different costs and needs faced by local authorities and the ability of individual councils to raise council tax.

But the proposals have been met with concern by the Royal Borough , Buckinghamshire, Slough and Wokingham councils, who have shared fears over the impact and losses of millions of pounds.

At a cabinet meeting last month, Royal Borough councillors were warned the authority’s shortfall could rise to £35million a year, with the proposed changes to Government grants expected to have a big impact.

The meeting heard the way this is calculated, using a notional level of council tax for all local authorities, means it will perform ‘poorly’ and miss out on millions of pounds in grant funding over the next three years.

Cllr Lynne Jones told the Advertiser: “The Fair Funding Review is not good for RBWM because the council will lose out on millions in funding.

“When calculating how much money the council needs in grant funding, the review assumes a council tax increase of 4.99 per cent and that the council receives national average council tax (£2,000 at Band D).

“In fact, RBWM’s council tax is £500 lower than average, due to the council’s history of council tax reductions and freezes.

“This notional assumption means the council will continue to receive £35million a year less than it needs to deliver local services.”

She added that the council also ‘loses out’ because the review will re-distribute the funding to more deprived areas, meaning the council’s grant funding will be cut.

Cllr Jones added: “If the review proceeds without any changes the council will have no choice but to continue to seek exceptional financial support from the Government, which gives the council permission to pay for services with borrowing.

“This approach leaves the council with more debt to pay off and interest to pay on the loans.”

A Slough Borough Council (SBC) spokesperson said the changes are ‘to be welcomed’, but the increase in funding is not keeping up with the council’s pressures in adult social care, particularly temporary accommodation.

The authority says the Fair Funding is expected to deliver a funding increase for the council, which has more deprivation than other parts of the county.

The council plans to use the additional funding to cover ‘some of the ongoing pressures’ in the adult social care and temporary accommodation areas.

But a spokesperson added: “One of the areas in funding that we would like the Government to reconsider is in relation to business rates where we are due to lose £10million compared to last year.”

Elsewhere, Wokingham Borough Council (WBC)’s leader Stephen Conway said that, as it stands, almost £50million of borough’s council tax could be distributed elsewhere over the next three years.

The council said the proposed changes come after years in which WBC ‘has been the lowest, or one of the lowest, funded unitary councils in the country’.

In July, councillors at a full council meeting of Buckinghamshire Council voted through a motion registering its ‘strongest objection’ to the proposals.

The minutes state that while reform and simplification to boost financial sustainability ‘are welcome in principle’, the reality is that ‘these changes will significantly reduce Buckinghamshire’s funding allocation, potentially by tens of millions of pounds’.

This would be due to an ‘overreliance on council tax equalisation and a failure to properly account for the real cost pressures we face’.

A Ministry of Housing, Communities and Local Government spokesperson said: “The current, outdated way in which local authorities are funded means the link between funding and need for services has broken down, leaving communities left behind.

“That’s why we are taking decisive action to reform the funding system so we can get councils back on their feet and improve public services, with the IFS recognising that our changes will better align funding with councils’ needs.”