Council calls for fairer funding from Government

Almost £50million of Wokingham Borough’s council tax could effectively be distributed elsewhere over the next three years under proposals being considered by the government. 

The government is consulting on a new way of allocating money to local councils that would, if carried out, see Wokingham Borough facing millions of pounds of significant cuts phased in over the next three years, while effectively subsiding increased funding elsewhere. 

The government’s current proposal would introduce a single funding formula for all councils phased in over three years, with no protection for those most affected by the end of the settlement period.

The changes come after years in which Wokingham Borough Council has been the lowest, or one of the lowest, funded unitary councils in the country. 

Wokingham Borough Council is calling for mitigation that could protect it, and other affected councils, from the worst impacts of the changes and is seeking to build an alliance with other authorities to make the case to government. 

Councils such as ours would lose out

Council leader Cllr Stephen Conway said:   

“We understand the government’s desire to redistribute funding but the way they are proposing to do it is very damaging. 

"Councils such as ours would lose out to an extent that we’d struggle to meet residents’ needs and, although we are in better financial shape than others, I fear there would be effective bankruptcies around the country, and I cannot believe the government wants that. 

“We are proposing a simple fix, which is that the government set a ‘floor’ – a minimum annual funding increase that all councils receive regardless of the formula. 

"This has been done in the past because local authority funding is so complex that no single formula for working out who should get what is perfect – there needs to be a level of protection. 

We calculate that a 4 percent floor increase would protect the worst hit councils (over 50 councils) without stopping the government achieving its desired redistribution.” 

Cllr Conway and the council’s chief executive Susan Parsonage have written to councils that could be helped by a 4 percent floor to seek partners for a joint campaign. The council is also contacting businesses, voluntary and community groups and town and parish councils to call for support. 

Commissioned local government experts

Wokingham Borough Council has commissioned local government finance experts PIXEL Financial Management to look at the government’s Fairer Funding Review 2.0 proposals in depth. The figures are not set and are likely to continue changing, but the latest estimates are: 

• The proposed settlement would mean most of the increase in income from growth in council tax (£47million) is not available to us as it is effectively being redistributed elsewhere
• This would increase the savings challenge we face over the three years from just over £10million to over £30million 

To give a sense of scale, the £47million cumulative loss over the proposed three-year settlement is equivalent to nearly eight years’ worth of the council’s annual spend on waste collection, which is around £6 million per year. 

Cllr Imogen Shepherd-DuBey, executive member for finance, said:   

“We have had regular real-term reductions in our funding over recent years and have already saved millions through great efficiencies and investments. 

We have also built-up strong reserves and have assets we could sell – so we are in a better position than many councils. But if the funding settlement goes ahead as currently planned, we would be hit very hard, and residents would notice changes.” 

Wokingham Borough Council will submit its response to the Fairer Funding Review 2.0 consultation shortly and will continue to call for mitigation as well as preparing for the impact of any further real-term funding reductions.