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MP demands clarity on local government spending power figures

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MP demands clarity on local government spending power figures

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Published by Max Salsbury for 24dash.com in Central Government and also in Finance, Local Government

Communities and Local Government department praised for financial management of £34 billion budget Communities and Local Government department praised for financial management of £34 billion budget

The chair of the Communities and Local Government Committee has called for the coalition to stick to the agreed measure of council spending power when discussing changes to funding.

Labour MP Clive Betts’ call follows the government’s "repeated failure" to set out the full calculations behind its claim in the 2013 spending round that local government expenditure would fall by only 2.3% in real terms between 2014/15 and 2015/16.

In correspondence to the committee, neither Danny Alexander nor Eric Pickles have been able to provide details of the spending reduction calculation and explain exactly which funding streams are included, meaning that the committee and the public have had no opportunity to scrutinise properly the proposed local government funding reductions.

Clive Betts MP said: “An essential part of select committee scrutiny is testing the government’s figures.  It is frustrating that the government has an established measure for presenting local government spending power, but, rather than use that method – I assume because the figure wasn’t rosy enough – the Prime Minister comes up with a ‘better’ figure based on an unexplained new methodology.”

While the Treasury’s figure was based on a new calculation for local government spending, the Department for Communities and Local Government already had an established measure, local government ‘spending power’, which takes account of a wide range of revenue available to local authorities.

In addition, over the past year ministers have quoted a range of further figures on local government spending, each of which has been calculated in a different way. 

Betts said: “Over recent years, the government has produced an array of different figures on local government finance.  Ministers have to stop quoting whichever figure best suits their argument on any given occasion. Without an agreed single measure of local government spending power there can be no public transparency or open debate on council funding.”

In correspondence with the committee, published today, DCLG figures for local government spending power indicate a reduction between 2014/15 and 2015/16 of 3.3% in real terms (1.8% in cash terms).

This reduction compares to the Treasury’s claim during the 2013 spending round that local government expenditure would fall by 2.3% in real terms (0.5% in cash terms). 

The addition of the Better Care Fund to spending power in 2015/16 masks an even greater decrease.  If funding that is pooled with the NHS were removed from the calculation, the real terms reduction in spending power would be 7.1% (5.6% in cash terms).

Betts added: “The government’s established ‘spending power’ measure shows a real terms reduction of 3.3% between 2014/15 and 2015/16. The Treasury, however, chose to invent a new measure of local government spending, which purported to show only a 2.3% real terms reduction. In spite of my repeated requests, the government will still not provide a full breakdown of how this figure was calculated.  My committee cannot carry out effective scrutiny if the government chooses to play fast and loose with important data on public funding.”

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