City braced for 10% cuts in government funding

NOTTINGHAM City Council is expecting cuts in Government funding of up to 10% during the next two years, according to a senior officer at the authority.

Tony Kirkham, director of strategic finance at Nottingham City Council, has told councillors they must brace themselves as the Government tries to reduce its budget deficit.

He told the council's Overview and Scrutiny Committee: "A substantial part of the cost-saving the Government is to achieve will come to us in local government.

"Local authorities could be subjected to a 10% reduction."

He said local government finance organisations supported that estimate, and the city council is analysing what that might mean in Nottingham.

The city council's budget papers state: "Although many variables are not yet certain, it is clear the public sector has lower than previously anticipated levels of funding in the years ahead. Detailed financial modelling has been undertaken in order to determine the likely scale of the future challenge."

The council's income for the coming year is already fixed by the Labour Government, but if the Conservatives come into power after the General Election in May, funding could be reviewed.

However, whichever party is in power, funding is expecting to fall in the following two years.

The council has considered three scenarios for the years 2011/12 and 2012/13 – a freeze in its annual grant from the Government, a 5% reduction, and a 10% reduction.

The council has already planned savings during the three-year period, but they would be well short of what will be needed under all three scenarios.

The city council anticipates it would have to find an additional £15m savings during the two-year period if the Government grant was frozen, £40m if it is cut by 5%, and more than £60m if it is a 10% reduction.

This all comes on top of significant savings this year to account for additional costs, with up to 300 jobs set to go and services affected.

Coun Graham Chapman, deputy leader of the city council, said he expected the grant to fall up to 5% in both 2011/12 and 2012/13.

He said: "The reason we have been tightening our belts quite severely this year and last year is in preparation for what might happen.

"I am rather hoping [the reduction] might be zero or minus 5% – 10% would be over the top."

Even a zero reduction would be a reduction in real terms since funding would fall behind inflation.

Coun Chapman added: "It will depend on which Government gets in."

Liberal Democrat councillor Gary Long said he thought the prospect of a 10% reduction was unlikely, but if it did happen "local government would be massacred".

"[Under previous Conservative governments] there were 0% increases and that was painful," said Coun Long.

charles.walker@nottinghameveningpost.co.uk