Gateshead Council Productivity Plan

The Council's ability to mitigate the impacts of unfair funding and increasing demand is hampered by a financial framework that is characterised by single year and late funding settlements, costly competitive bidding, and continuing delays to long overdue funding reforms.

As a sector we're preparing our MTFS plans against a backdrop of funding uncertainty. The evidence of financial strain on councils has been growing steadily with the pressure on the sector now manifesting in Section 114 notifications, with the potential for more to follow. Although Gateshead Council is not in this position, the burden of further savings is a continuous strain on service delivery to a level expected by residents. Although there has been some additional resources for social care pressures in recent years funding, the Local Government Finance Settlement fails to significantly address the long-term funding crisis faced by councils, with the connection between need and funding lost because of an outdated formula and the move to localisation. Short-term solutions, described as 'exceptional financial support' such as increases to council tax and capitalisation directions, are not the solution.

Short-term funding runs counter to effective strategic planning resulting in short-term decisions. The sector needs multi-year settlements as transformation and preventative interventions to suppress future demand require upfront resources and longer time frames to address the underlying cause rather than the symptoms. And crucially, that investment needs to enable transition to a steady state while interventions are embedded. The continuing delays to the reform of local authority funding is a concern with the settlement distributed on an outdated formula, increasingly complex business rates funding, and deeply regressive council tax based on outdated property values.

Specifically, the Council would ask for:

• Multi-year and timely settlements.
• An end to fragmented funding pots and onerous competitive bidding.
• A commitment from the Government to implement the long-delayed Fair Funding review.
• A reset of the business rates baseline.
• A review of New Homes Bonus.
• Local flexibility over council tax referendum principles
• Consider options for wider reform of local taxation, which currently disadvantages councils with low tax bases.
• An increase to the quantum of local government funding.
• Regulate the children's social care market impacting on spiralling placement costs.
• Review Home to School transport entitlement.
• Reform the social care precept, which is unfair for the most deprived authorities, and not linked to need.

The Local Government Association White Paper outlines 5 priorities to drive changes:

• An equal, respectful partnership between local and national government;
• Sufficient and sustainable funding;
• Backing local government as place leaders;
• A renewed focus on prevention and services for the wider community; and
• Innovation and freedom from bureaucracy.

The paper estimates that local authorities are facing a £6 billion funding gap over the next three years, just to maintain services at their current levels. We know the way in which central Government finances local government is unsustainable, and yet at the same time demand for our services continues to grow. Multi-year settlements can be transformative, allowing local authorities to plan long-term programs and invest in much needed early interventions, particularly those needed in social care. As place shapers, local authorities are key to solving some of the biggest challenges. The support that we give to local communities is vital, but to respond effectively, grow our economies and community wellbeing, we need to be properly resourced to provide the services needed by our residents. Greater certainty on funding through multiyear settlements and more clarity on financial reform will enable us to plan effectively and maximise the impact of spending over the medium-term.