Residents are facing cutbacks in council services across the board following plans to slash Tunbridge Wells borough’s budget almost in half.
It comes after shock moves by the Department of Communities and Local Government to change the method used to pass on money through the Revenue Support Grant (RSG).
The proposal has put the Conservative-run council at loggerheads with the Conservative central government.
Services which could be affected include the upkeep of parks, the Assembly Hall Theatre, the Gateway service centre and fly tipping rubbish collections as the council looks set to lose £781,000 of its grant in the next financial year.
To compound the situation, the council is just one of 15 local authorities to be singled out for a ‘negative grant’, meaning that by 2020 it will actually have to pay £610,000 back into central government.
The decision, brought about by a last minute change in funding methodologies, has been described as a ‘bombshell’ by the council member responsible for finance.
The comment comes after a spokesperson for the Department of Communities and Local Government (DCLG), which is headed by MP Greg Clark, admitted Tunbridge Wells was just one of a handful of authorities to be penalised.
She said: “It is one of 15 authorities who will be subject to the negative rate because they are the most self-sufficient and deemed best able to cope.”
As recently as November, the council had been drawing up its budget plans for the 2016/17 financial year on the assumption that the DCLG would pass the same proportion of cuts the Chancellor has made its own budget on to councils. This has happened in previous years and would have meant a cut of 16.5 per cent to the RSG.
But the council was shocked when, just two months before the budget was due to be finalised, the department changed the way it would calculate the grant, leaving a hole of 49 per cent.
In a rare public statement, Lee Colyer, the borough’s Director of Finance and Corporate Services, a non-partisan position, said the council was being ‘penalised’ for being too well run.
He said: “We were reasonably comfortable in November when the spending review was published.
Affluence
“However, in December the DCLG needed to come up with a way of distributing the headline figure to local councils and they surprised everybody by coming up with two new methodologies.”
The first of the changes meant expenditure would be weighted towards local authorities which offer adult social care – London boroughs, unitary authorities and county councils – but not district level authorities, such as Tunbridge Wells.
“We get a slither of what is left,” he said. “The second, more surprising, thing they did was weight the cuts so that those areas with higher council tax income will receive greater cuts to their funding.”
The biggest determinant of how much income is received from council tax is the value of properties in the area and Tunbridge Wells has a buoyant property market.
However, the costs of running services are also higher due to this relative affluence.
He said: “The whole economy is more expensive. Business rates are higher, the cost of doing business is higher and wages are higher.
“So it is counter intuitive to penalise us because we have higher council tax income, but that is needed.”
Mr Colyer said residents have the highest salaries in Kent, but government legislation means the council is unable to obtain any meaningful increase in their local tax.
The borough council only receives 10p in every pound raised in council tax, meaning a two per cent increase in its precept, the rate at which a referendum on a rise is triggered, would only raise £3.06p extra per year on a band D property.
The consequence is Tunbridge Wells has the lowest spending power in Kent, with just £245Â per household, compared to £300 in neighbouring Tonbridge and Malling.
However, it is another change which could prove most damaging to the budget, as the government plans to ‘raid’ the minimal amount of business rates the council can retain, currently set at just 4p in the pound.
Mr Colyer explained: “This is the most serious change because when the government was cutting our RSG, instead of it disappearing by 2020 they brought us forward to 2018, unlike many other councils.
“The real shocking announcement was that once we reach bottom, ie no government grant to provide services, the DCLG has actually come up with a system called negative grant.
“They are taking money away, and the way they are going to do it is raid our minimum amount of business rates.”
The money taken away will then be redistributed to other authorities deemed less efficient.
Other sources of income under threat include the New Homes Bonus, a scheme in which councils are rewarded for house building, but which is now under review.
Although the changes are not finalised until later this month, Mr Colyer believes it will be impossible for the DCLG to make any changes now as other councils will be given just a matter of weeks to review their budgets.
In effect, the dramatic cuts are now a foregone conclusion he warned.
Borough Councillor Paul Barrington-King, portfolio holder for finance and governance, described the government’s decision to move towards a negative grant as ‘just astonishing’.
He said: “The government talked about localism and retaining the proceeds of growth from business rates and it looked like a good headline at the time.
“But this move towards negativity is just astonishing, so the prognosis once again is we are being hit on all fronts as an authority.
“We are doing our level best, and some, to try and assist the government to overcome its fiscal challenges.
“External auditors have labelled us an excellent authority and we just think where’s the reward? It’s not right, it should be a meritocracy.”
Cllr Barrington-King said that in his role as a board member of the South East Improvement and Efficiency Partnership – a body which helps support councils and their partners to become more efficient, innovative and engaged with citizens – he had not seen many councils as well run as Tunbridge Wells on such a tight budget.
He added: “To put it into context, we end up as the tax collectors, the bad guys, but we only get ten per cent, and on the second lowest rate in Kent. I don’t know of any other council which works as well as a business or on an entrepreneurial basis. Few work with the government as positively as us.
“We haven’t gone off and said we won’t play ball. We are just saying ‘give us the tools and we will make it even better’.
“But we can’t do it unless they give us that armoury. So, we are caught between a rock and a hard place at the moment.
“We need the flexibility to shape and model our own communities and keep the public on board.
“That is why we are extremely disappointed in the current state of affairs.”
Labour Councillor Alain Lewis said: “We sympathise with the plight of the borough council, which has been let down by central government and their austerity agenda, which isn’t working.
“George Osborne has created a complete mess with his sums that don’t add up. This means we will have to see what cuts to front line services the council will make, which will be bad for the people of Tunbridge Wells.
“It is going to get worse by 2020 I think, and more staff are going to be laid off.”
MP Greg Clark said: “My role as Secretary of State does not involve me deciding individually the budgets of particular councils like Tunbridge Wells. The annual Local Government Financial Settlement is made for England as a whole, with similar councils receiving similar levels of funds. The Provisional Financial Settlement is the subject of an annual consultation and the government is carefully considering the views of all councils who responded to it.”
A Department for Communities and Local Government spokesperson said:
“This government is providing a long-term funding settlement for the first time, allowing local authorities to plan with certainty.
“Councils will have almost £200billion to spend on local services, including a £3.5billion social care package, over the lifetime of this Parliament.
“Allocations are decided overall and not council by council, and Tunbridge Wells Council will still have £44.6million to spend between now and 2020.”
