Cumbria County Council expects to face tough challenges in next year’s budgets after the first indications of how much funding the Government plans to provide for council services in 2006/7.
Chancellor Gordon Brown’s pre-budget speech, and the detailed information from the local government minister, is the first sign all local authorities get of how much money they can expect for the next financial year in the form of the Government grant.
Around two thirds of all council spending comes from Government grants while the rest is raised through the council tax.
This year the 25-year-old Revenue Support Grant system was replaced by a new system which has removed all school-age education funding from the council's headline settlement.
The changes in how the grant is calculated means that direct comparison with previous years is difficult. But Cumbria County Council's basic settlement of £105.7 million, represents a 3.3 per cent increase on a similar tranche of funding in last year's budget. This is a fraction higher than the average settlement for similar authorities.
However, the costs of providing council services in Cumbria and across the country are rising at a rate higher than 3.3 per cent a year because of increasing pressures such as growing waste disposal costs and increasing number of older people.
The council is still waiting to hear from the Government about specific grants which could be worth around £30million.
Councillor Joan Stocker, deputy leader of the council and budget spokeswoman, said: “There is no point pretending that this looks like being anything other than a very tough settlement for Cumbria County Council.
"The new method of organising local government finance is very complicated. The devil is in the detail and it is going to take a lot of more work before all the implications of the settlement are understood.
“What is clear, however, is that we were right to plan for a difficult budget for the year ahead in 2006/7.
“There does seem to be some extra funding from the Chancellor to help keep council tax down and that will be welcome, but the truth is that we are still facing some tough spending choices.
"We are going to have to reshape services and find significant savings if we are going to continue providing services at current levels and keep our council tax increases to within acceptable national levels.”
The cabinet will now produce a draft budget at a special meeting in Carlisle on December 20th on which consultations with the public and other interested parties will begin.
Early in November the Local Government Association warned that local authorities across the country could be facing a shortfall in funding. Before the Chancellor's statement, the LGA suggested that council tax bills might increase by 10 per cent even. Even after the extra funding announced by the Chancellor, and with the government saying it will penalise authorities which increase tax by more that five per cent, budgets in local government will be tight with councils having no choice but to find more efficiency savings or cut services.