Councils oppose any cash diversion

Anabel Unity Sale reports on local government’s response to
Labour’s leaked plans to divert cash earmarked for councils in the
south to those in the north of England.

To quote Cabaret’s Sally Bowles “money makes the world
go around”. This is especially true in the world of local
authorities. Their world was rocked recently by the suggestion, in
a leaked government memo, that a new Labour government would
consider diverting cash for councils from the south of England to
the north.

This resulted in last week’s cross-party summit of councillors
and social services directors from Buckinghamshire, Surrey, East
Sussex, Sussex, Hampshire, Hertfordshire and Kent councils.

Peter Gilroy, Kent’s strategic director of social services,
believes any diversion of cash would “absolutely cripple the south
east”. He says: “If the south east, which is the engine of the UK
economy, is attacked in this way then everyone will suffer. The
engine won’t go any faster if the fuel is taken away.”

Kent social services’ standard spending assessment last year was
£11.5 million. But, Gilroy says, the department actually spent
£13 million – not including new services.

The government’s approach to social services and health
partnerships does not help, he says. “Some of the planks of policy,
no matter how admirable, come with hidden costs. The NHS Plan has
wonderful aspirations but is very weak on detail and on financial
planning. We want to be with the government on this, but if we
don’t have a sufficient base budget the plan will be
corrupted.”

Mike Leadbetter, Essex’s social services director, also attended
the meeting. As a northerner, with 20 years’ experience of working
in the Manchester area, now working in the south he has a foot in
both camps. “It would be a great mistake to get into arguing about
who is the most deprived, the most underfunded. Arguing is
divisive,” he says.

Essex Council is facing the same pressures as Kent. “Last year
we spent nearly £5 million extra on children’s services
because of a significant increase in the number of looked-after
children and £650,000 on learning disabilities and older
people’s services,” says Leadbetter.

He says the problem of social services departments’ resources
should be tackled England-wide. “We need to see a levelling out of
funding levels. There is no point in robbing Peter to pay Paul. Let
us collectively argue about social services’ underfunding and not
be split off into the North and the South.”

So are northern councils as under-resourced as the leaked
government memo suggests?

Newcastle Council head of finance Paul Woods says his authority
is still under a lot of financial pressure despite receiving a
higher amount of standard spending assessment per head of
population than some southern councils. Newcastle set its social
services budget for 2000-1 at £68.8 million, £1.1 million
above its £61.7 million standard spending assessment. “We are
in a crisis situation because we overspent that by £2 million.
We are spending £9 million above the government guideline
figure,” he says. “We want to see a pledge for more money for
social services, with every single social services department
getting more money and not just ones in particular areas.”

Sheffield’s social services department is in the fortunate
position of being on target to spend its £113 million standard
spending assessment in the coming year. Penny Thompson, executive
director of social services, is the first to admit that it won’t be
easy. “It is going to be a struggle. We are reshaping our services
dramatically to achieve a fit between activity and resources while
at the same time achieving optimum independence for all our
citizens,” she says.

Helping achieve this is a five-year service and budget strategy
that started last year. She says part of the plan is to spend more
on children’s services rather than on older people, without
reducing the services available.

Concerns over funding are nothing new. Last autumn’s
Modernising Local Government Finance green
paper¹ started the ball rolling and in December local
government minister Hilary Armstrong gave it a big kick by saying
the government wanted to cut between £340,000 and £4.6
million off council budgets.

Shifting money to the North does not win the approval of the
Local Government Association. Finance policy officer Mike Heiser
says: “We do not support proposals of individual formula changes on
the grounds that they would benefit one local authority, or group
of authorities, at the expense of another.”

The overall distribution of revenue to councils is broadly fair,
agrees Stephen Fitzgerald, director of local government finance at
the Association of London Government. “We are not convinced that
tinkering with the formula will make it any more fair.”

So the message is clear. All councils, regardless of location,
need more cash. And not at the expense of other local authorities.
Are you listening Tony?

¹ Department of Environment, Transport and
the Regions, Modernising Local Government Finance, DETR,
2000.