Following two days careful analysis of the Government’s working numbers behind the Isle of Wight council’s grant allocation by the council’s number boffins, Leader, David Pugh, has written to Under Secretary in the Department for Community & Local Government, Bob Neill MP.
In a letter to the minister, Pugh claims that an incorrect assessment has been made of the overall grant figure for the current financial year – 2010/11.
In summary?: The government needs to pay the council £898,000 more than they’ve outlined in their figures.
Time will tell if the plea is successful.
Here’s the full text of Cllr Pugh’s letter.
Dear Bob
Local Government Finance (England) Revenue Support Grant for 2011-12 and 2012-13 and related mattersI write further to the Secretary of State’s 14 December letter to all local authority leaders, regarding the above – and also your 6 December letter, entitled Provisional Local Government Finance Settlement 2011-12, to Baroness Eaton. In your letter, you indicated a willingness to meet delegations from individual authorities during the consultation period. Given what I will outline below about the Isle of Wight’s situation, we would be grateful for an opportunity to meet with you as soon as is convenient.
Firstly, I should emphasise that our administration is supportive of the Coalition Government’s deficit reduction strategy – the broad need for which we made clear in our 2009 re-election campaign. We have, however, shared the Local Government Association’s concerns about the front-loading nature of the grant funding reductions, but we recognise that you have taken steps to address this through the introduction of the Transition Grant for some local authorities.
I should also note that we welcome the allocation, to the Isle of Wight, of £2.13m of NHS funding to spend on social care that also benefits health. We are increasingly delivering integrated working between health and social care services, between the Isle of Wight Council and the Isle of Wight Primary Care Trust. With the chairman of the local trust, I am writing separately to the Secretary of State for Health to offer a local solution to how we can make best use of this funding and our wider budget allocations – in line with the spirit of the community budgets initiative on which your department is leading.Our main contention with the provisional grant settlement is that it is based on an incorrect assessment of our baseline overall grant figure for the current financial year – 2010/11, and this has had an adverse impact on the level of damping proposed for the next financial year.
This is as a result of incorrect figures being used for two elements of grant funding which are now being rolled into the overall formula grant. The Government’s assessment of our total formula grant for the current financial year has included figures of £487,000 and £335,000 for concessionary fares and local transport respectively.
However we have actually received £1.782m and £490,000 (respectively) in allocations for these services in 2010/11. Therefore whilst the Government, in their published data, considers that our total adjusted formula grant for the current financial year is £72.552m, in reality it is £1.45m more – at £74.002m.
With our baseline overall formula grant figure for 2010/11 now being £74.002m (excluding special grants), we are actually facing a reduction of £10.412m next year (£74.002m minus £63.590m), rather than the £8.962m as currently calculated. The percentage implication of this is a 14.07% reduction in formula grant, as opposed to the 12.35% reduction as currently calculated. Furthermore it increases the calculated reduction in our total revenue spending power from £5.995m (3.88%) to £7.445m (4.78%). This pushes us above the national average 4.4% reduction in total revenue spending power.
We consider that this significant adjustment in the percentage reduction of both our formula grant and our spending power has had an impact on the amount of the damping proposed for 2011/12. Using the same factors included in the model for calculating the impact of floor damping we calculate that the damping adjustment is overstated by some £898,000.
We remain concerned at the continued use of the damping mechanism to remove, from authorities such as ours, an entitlement of funding which is required to meet our assessed need. The relative needs element of the mechanism to calculate our Revenue Support Grant responds to our significant demographic pressures and seeks to allocate funding (within the overall settlement) accordingly. We therefore remain of the view – as we frequently articulated to the previous government – that no level of damping should be applied, and we would ask that this is the starting point in your considerations, especially given the summary of our situation that I will outline below. However, given that you are not proposing to adjust the overall formula for local government funding for another two years, we recognise that the complete removal of the damping effect at this stage may not be possible. Our main contention is therefore what I have outlined further above – namely that our damping adjustment is overstated by some £898,000 and we consider that our final Revenue Support Grant should be increased by this amount.
As a small unitary county authority (including fire & rescue), we face particular challenges in continuing to deliver frontline services in the current climate. Our demographic pressures are such that in order to maintain vital care and support for our large number of vulnerable residents, we are proposing significant reductions in the number of other services managed and funded by the Isle of Wight Council. This is a journey we have been on for some time – not least due to the continued effect of damping, and gap in concessionary fares funding (between what we receive and the actual local cost) – which has led to a combined shortfall of an estimated £20m in funding over the past three years alone. We continue to make separate representations on the issue of funding for the concessionary fares scheme, which has – since its inception – had an inequitable distribution mechanism at a national level.
We always knew that our contribution to the national deficit reduction would require a radical new approach to service delivery, and this is the focus of recent proposals we have published for the future direction of the local authority. In this context, we welcome the direction outlined in the Decentralisation and Localism Bill and have recently met with a number of DCLG officials, within the Vanguard Programme Team, to discuss how potential barriers to new models of working can be overcome. I mention all of this as an indication of our willingness to respond to the current challenges with creative local solutions to service delivery. None of this will be without pain though – and we are currently facing approximately 535 redundancies within the local authority (from a workforce of 3000). Due to our status as an island, these are overwhelmingly residents who live and work within a defined local economy area that is already over reliant on the public sector and faces significant challenges as it seeks to improve prosperity. To this end, we will shortly be bidding to secure grant funding from the Regional Growth Fund, through our membership of the recently approved Solent Local Enterprise Partnership. I should also mention that, despite the geographical constraints of the Solent, we intend to share some local authority services with two neighbouring unitary authorities – Southampton and Portsmouth.
Returning to the focus of this letter, we would strongly argue for the Isle of Wight to receive its full entitlement of funding (with no damping applied) – and as a minimum for our damping to be adjusted to take account of the £898,000 overstatement that is currently in place. Receiving this entitlement of grant will help us mitigate some of the adverse impacts of the overall reductions in funding and manage the transition as effectively as possible.
We would welcome the opportunity to meet with you to discuss this matter further, particularly in light of the wider challenges we face as outlined above. I will be making contact with your office to seek to arrange a meeting in the near future.
With best wishes
Councillor David Pugh
Leader of the Isle of Wight Council
