Public spending set to be cut by £400m
Oct 9 2007 by Adrian Pearson, The Journal
THE Chancellor is today expected to announce at least £400m worth of public spending cuts in the North-East.
Councils across the region are preparing for bad news when Alistair Darling announces Government funding plans for the next three years in the Comprehensive Spending Review (CSR).
Because the UK’s economy is doing worse than expected the Government is widely expected to limit spending, with councils expected to be hit hard.
Accountancy firm KPMG has warned North-East councils the Government is likely to demand “efficiency savings” of up to 10% – wiping off £400m from council spending powers.
The 25 councils in the North-East would face difficult choices as they seek to continue to deliver award-winning services with less money.
Iain Hasdell, KPMG’s head of local government advisory business said: “I can confidently say that local Government is looking at a settlement of between nine and 10% reduction. In the North-East that will mean something in the region of a £400m cut in funding, much of which is spent very locally. Now this is not just a local Government issue. Development agencies such as One NorthEast are going to have to start thinking about mitigating the impact of such drastic cuts, while themselves working on a limited settlement in the CSR. This is a major issue for regional spending.”
Newcastle Council leader John Shipley said the Government was placing “unreasonable pressure” on local councils.
He said: “A 10% cut on the back of current efficiency savings is excessive, and I am deeply worried by the impact of the CSR. I do not believe that the Government is going to give us the financial support needed.
“Any budget cut by the Government will be really bad news, and we are all expecting at least some reduction. In the end it will mean cuts in council services.
“We are doing our best to drive through the efficiency agenda that the Government is dressing up as savings but are in fact cuts. In effect they are asking us to do more with less because they do not understand the enormous demand being made of councils.”
Hexham MP Peter Atkinson warned the cuts would be felt across most pubic services. He said: “When we see spending increases on health tomorrow it is likely they will be funded by council cuts and council tax increases.
“And making savings at a local Government level simply means staff redundancies. It looks like council tax payers will take a hit because the Government can’t manage things. Groups such as the Sage and the Baltic should be worried because there is a lot less money going around, and there are real spending cuts here.”
Northumberland County Council’s director Of finance Steven Mason said the council was preparing for the CSR.
“At this stage the announcement is yet to be made so we do not know the full details making it impossible to exactly gauge the impact on Northumberland.
“If efficiency savings are imposed that are over and above what we are already working towards in the county council, it would require consideration by our councillors as it could potentially mean additional pressures on services and or council tax levels.”
