Labour councillors have set themselves on a collision course with Tory ministers after agreeing to raise council tax by the most possible without triggering a referendum.
This week Communities Secretary Eric Pickles challenged Durham County Council to avoid tax hikes and protect frontline services by selling off its £62m of “surplus assets”.
Hours later, the authority’s cabinet ignored the suggestion and backed a 1.99 per cent council tax rise – just under the two per cent that would have prompted a local referendum.
Assuming a full council meeting rubberstamps the proposal later this month , that will mean Band A householders, 59 per cent of those in County Durham, having to pay 33p a week extra for their council services in 2015-16.
The Government has offered Durham a grant worth £2.18m if it freezes council tax, but that would still leave a £1.2m shortfall from the £3.398m the tax hike is expected to generate – at a time when the cash-strapped council faces unprecedented cuts of £250m, including £16.3m over the next year.
Deputy leader Alan Napier said raising council tax had been a very difficult decision to take at a time of national austerity, pay squeezes and when household budgets are under pressure.
“This is a sensible and prudent budget. We are protecting frontline services as best we can,” he said.
The council only learned how much money it will get from central government last Wednesday (February 4).
The final settlement brought some unexpected good news – an extra £966,000 for welfare help and social care. But Cllr Napier said this was still £1m less than for this year.
The overall revenue budget totals £409.9m. A capital programme of £366m to 2017 is also included, with £93m for building new and improving existing schools, £101m for maintaining and improving roads, £18m for broadband, £14m for industrial estates and £8m for town centres.
Councillors would see no increase in their allowance and their mileage rate cut to 45p.
By next March, the council expects to have cut 1,950 jobs from its 2010 workforce.
Council house and garage rents are set to increase by an average of 2.2 per cent.
Labour wants to continue its pioneering Local Council Tax Support Scheme, meaning no working-age council tax benefit claimant has their payment reduced.
Conservative and Liberal Democrat groups want council tax frozen. Final decisions will be made on Wednesday, February 25.
Source – Durham Times, 12 Feb 2015
Ministers have accused North East councils of sitting on unused land and property which they could sell to protect services.
But local authorities facing massive spending cuts of more than £240 million ridiculed the claims – and pointed out that there are strict rules preventing them from selling the land to fund services.
And the comments provoked an angry reaction from Labour, who accused the Government of imposing higher cuts on urban councils in the North East than wealthy parts of the country.
Ministers launched the attack on councils which are reducing services and raising council tax, claiming that they had nobody to blame but themselves.
The Association of North East Councils has warned that crucial services such as care for vulnerable children are in danger of collapse as massive cuts in council funding wipe almost quarter of a billion pounds off budgets across the North East this year.
It says the true impact of Government spending cuts has been hidden because authorities have succeeded in “raiding” other services and diverting funds where they are needed most – but they have reached a point where this just won’t be possible any more.
But Local Government Secretary Eric Pickles issued a statement claiming councils have large sources of untapped revenue including money held in reserve, assets such as property or land, and council tax arrears which have gone uncollected.
And his department published a league table highlighting the worst offenders, with County Durham named as one of the authorities with high levels of surplus assets. The authority is sitting on assets worth £62 million, according to the Department for Communities and Local Government (DCLG).
The department also named Gateshead as an authority with high levels of surplus assets, worth £49 million.
Government figures also showed that Northumberland council had reserves of £96.4 million while Newcastle-upon-Tyne had reserves of £78.9 million.
Mr Pickles said:
“Reserves have rocketed up in the past few years and councils could be making better use of assets to keep taxes down and protect frontline services, while at the same time doing more to stop the billions they are losing to fraud and collecting more Council Tax arrears.”
But the claims were dismissed by Councillor Alan Napier, Deputy Leader of Durham County Council, who said:
“We do have surplus assets of £62 million which includes both land and buildings, including former school sites.
“Most of these sites are either being sold, up for sale or in the process of being put up for sale. When sold, our hands are tied as to what we can spend the money on as the receipts are ring-fenced and can only be spent on new capital items such as buildings, vehicles or infrastructure.
“I would have expected Mr Pickles to know that receipts from surplus assets cannot be used to reduce council tax or protect front line services ”
Gateshead Council’s strategic director of corporate services and governance, Mike Barker, said
“£41m illion of assets which have been classed as ‘surplus to requirements’ actually relate to land which has already been contractually committed towards building much needed, good quality, affordable housing across the borough.
“The development of this land is already underway on sites at Deckham, Bensham and Saltwell, and Birtley. Over the next 15 years, the joint venture partnership between ourselves, Galliford Try and Home Group will build thousands of new homes on 19 different sites across Gateshead; bringing jobs, investment, and regeneration to many areas.”
The devastating impact of Government cuts on council services was confirmed in a report by the National Audit Office late last year, which warned that authorities were reaching a point where they couldn’t cope.
“While local authorities have maintained financial resilience overall, some – particularly among metropolitan districts – are now showing persistent signs of financial stress, such as unplanned in-year reductions in service spend.
“Looking to the future, there is increased uncertainty about how local authorities can manage further possible falls in income.”
Source – Newcastle Evening Chronicle, 11 Feb 2015
Another Tory-led government would spell the end of local services as we know them, a Labour council leader has claimed.
Durham County Council chief Simon Henig issued the stark warning as his cabinet discussed making another £16.2m of cuts next year, taking the total imposed at the North-East’s biggest council between 2010 and 2018 to around £250m.
Around 2,000 jobs have been lost.
Cllr Henig said Chancellor George Osborne’s spending plans for beyond the General Election and towards 2020, announced in last week’s Autumn Statement, would mean ‘the end of local council services as we currently recognise them‘ and told the County Hall meeting: “There’s now a very clear choice ahead of us in 2015, which I believe will shape the country for a generation to come.”
Local councils were expecting to hear how much money they would get from central government for the year ahead today (Wednesday), but the announcement was delayed until tomorrow (Thursday).
Durham faces much tougher cuts, of £32m and £39.1m, in 2016 and 2017 and 2015’s total would have been higher had councillors not opted to raid the authority’s reserves, to the tune of £10m.
The council has already cut around £130m and next year’s savings include £8.5m from children and adults services and £933,000 from introducing charges for garden waste collection.
The figures are based on a council tax rise of two per cent, although that may yet require a local referendum if Communities Secretary Eric Pickles has his way.
Opposition groups on the council have welcomed the use of the authority’s reserves and are expected to announce alternative budget proposals in the weeks to come, ahead of final decisions in February.
Source – Durham Times, 17 Dec 2014
Thousands of low-paid workers are in line for a pay rise, with the North-East’s biggest council poised to introduce a “local living wage”.
Labour-led Durham County Council is expected to adopt a minimum wage of £7.43 an hour next month (December) – meaning more than 2,500 of the lowest paid workers, including cleaners, catering staff and lollipop men and women, could get a pay rise of up to £1,000 a year from January 1.
The raise is still below the national Living Wage of £7.85, but would cost the cash-strapped authority more than £1m a year.
Councillor Alan Napier, the council’s deputy leader, said the scheme was a fair, affordable and sustainable way of introducing a realistic and deliverable living wage.
“We believe its introduction would not only make a significant difference to the lives of our lowest paid employees but would also have knock-on benefits for the authority and wider county,” he added.
Howard Pink, from Unison, said it was a step in the right direction.
“Local government is the worst paid of the public service sectors and it’s really important to address this issue. The vast majority of people to benefit will be women,” he added.
The council has been considering adopting the living wage for at least two years.
Liberal Democrat Mark Wilkes, whose attempt to force it through by the spring was defeated in July, said: “I’m delighted. A well paid workforce returns the investment in them many times over. We will continue to push for our lowest paid workers to get a fair deal.”
No North-East council has yet adopted the official Living Wage.
Newcastle, Northumberland, North and South Tyneside and Northumberland are working towards increasing their lowest pay levels and Scarborough adopted a minimum wage of £7.45 last November. Sunderland is committed to becoming a Living Wage employer by April.
Durham cannot force its will on schools, where the majority of the lowest paid work, as their pay is controlled by governors.
But Mr Pink said: “If schools are reluctant to bring it in, we will want to discuss that with them.”
The proposals will be debated at a full council meeting on Wednesday, December 3, at Durham’s County Hall.
Source – Durham Times, 19 Nov 2014