Council Leader, Councillor Phil Jordan, shares this latest news in relation the to council’s financial crisis. In his own words. Ed
The Isle of Wight Council Leader has issued a strong response today, following a letter from the Minister for Local Government (see below) which, while highlighting national increases in local government funding, failed to address the Island’s specific and worsening financial crisis.
Council Leader, Councillor Phil Jordan said,
“The Minister’s letter talks at length about national totals, but ignores the stark reality facing the Isle of Wight where Government funding is actually going down, not up.”
Funding to the Island is falling – not rising
Despite national Core Spending Power increases, the Fair Funding Review and provisional settlement will reduce Government funding to the Isle of Wight by more than £13 million over the next three years.
This reduction has been confirmed publicly in multiple financial assessments and independent reporting, yet the Minister’s response made no reference to it.
Councillor Jordan said,
“It is simply not credible to refer to national averages while avoiding the published figures that show the Island’s funding is falling.”
Failure to recognise the Island premium
The Council emphasised that the Government has been repeatedly provided with clear evidence showing it costs the Isle of Wight over £20 – £24 million extra each year to deliver statutory services at the same level as a comparable mainland authority — known as the Island premium. This includes higher transport, workforce and logistics costs, limited economies of scale, and demand pressures created by millions of visitors
Councillor Jordan said,
“The Minister’s letter does not even acknowledge the Island premium, despite years of documented evidence shared with Government.
“This cannot be overlooked any longer. It is the central issue.”
Fair Funding Review: The Island is worse off, not better
The Government claims the Fair Funding Review has ‘delivered reform,’ but the Isle of Wight Council Leader says the facts show the opposite.
The new settlement leaves the Island materially worse off, widening a structural deficit that will rise to £44 million by 2028/29, and potentially £65 million by 2029/30 without intervention.
Councillor Jordan added,
“We are now in a more precarious position because the review failed to correct the long‑recognised underfunding of island authorities.”
Borrowing is not a solution
The Minister’s suggestion that councils in difficulty approach the Department for support was also challenged. The only mechanism currently offered is Exceptional Financial Support (EFS) — a loan, not a grant.
The Council Leader warned,
“Borrowing to cover a structural deficit is not a solution. It just pushes today’s crisis onto future residents, leaving them paying off government‑approved debt for decades.”
For the Isle of Wight, EFS borrowing to cover £55m structural deficit could cost residents up to £94 million in repayments over 20 years.
Call for urgent Government action
The Council is urging the Government to formally respond to its Island Deal proposals, which set out the evidence for a £24m annual uplift required to deliver essential services sustainably.
Councillor Jordan said,
“We have one of the clearest evidence bases anywhere in the country.
“The question now is simple: how does the Government expect the Isle of Wight to set a lawful and sustainable budget when our funding is falling and our unique, unavoidable costs are not recognised in the settlement?”
The Council is seeking urgent discussions with Ministers to address the Island’s financial position before the next budget cycle. Both MPs have been advised.
