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Stretched St Helens Council fears added burden of business rate and council tax reforms
8:00pm Monday 7th January 2013 in News
ST HELENS Council leaders have voiced fears that a further downturn in the national economy could impact on already stretched services as it grapples with the government’s recent general grant settlement.
After analysing a pre-Christmas settlement announcement for 2013-14 and 2014-15 raises the overall annual revenue grant loss to £50million by 2014-15.
It has already resulted in the loss of an estimated 1,010 jobs – and cuts to services, with every council department’s expenditure currently under review.
In a bleak New Year statement, the local authority warned that as well as the grant settlement it has major concerns over “fundamental changes to the way councils are funded”.
The changes see the introduction of localised business rates and localised support for council tax – areas previously overseen by central government.
A council statement read: “The government originally consulted councils on retaining 100 per cent of their net business rates – but has now ruled that the figure will be just 49 per cent, with one per cent passed to the Fire Authority and 50 per cent passed to the government.
“It means the council will be exposed to any decrease in the number of businesses within the borough – leading to a direct impact on council finances and its ability to fund services to those who need them.
“Councils will also have to shoulder more of the burden with the help given to vulnerable council tax payers.
“Council tax benefit will disappear and be replaced by discounts – administered by local councils.”
Council leader Marie Rimmer said it was a matter of concern that the government had not funded this transfer of responsibility fully – and meant working age families who previously received full council tax benefit will have to pay at least £3.57 per week in council tax.
It will leave thousands of working St Helens families – some living in the poorest communities – facing a further squeeze on their household budgets.
Rimmer said: “The settlement introduces the most radical changes to the funding of local government in a generation with the introduction of the localisation of business rates and the localisation of support for council tax.
“These two government policies fundamentally affect the distribution of funds, the source of those funds and the risk profile facing this council and local government generally.
“The redistribution of business rates and council tax support grant will cost the people of St Helens millions of pounds - but the system helps people in the more affluent South East of the country.”
Councillor Rimmer said the government’s austerity measures, coupled with the possible future deterioration in the economy, made her fear for the future.
She added: “Despite the limited safeguards put in place by the government, we’re now at the mercy of market forces and will find it increasingly difficult to control our own destiny The latest settlement, published on December 19 last year, covers the financial years 2013-14 and 2014-15 - the third and fourth years of the government’s austerity plan.
This has already cost St Helens Council £36million in loss of central government revenue grants – rising to £50 million by 2014-15.
Furthermore, says the council, it has lost the Building Schools for the Future programme and the reduction in general programmed capital investment support of 26 per cent.
The council says it continues to “prioritise services to vulnerable adults and children’s social care”.
However, the future of Sutton swimming pool and the mobile community library service are among the early examples of services under scrutiny.
The council’s cabinet will consider the issue when it meets on January 9.