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