Local government cuts unfair to north-east, say councils

The average council in the north-east will lose £665 per person against £305 in the south-east by 2017-18 

Councils in the north-east of England will lose more than twice as much funding per person as those in the south-east over the next five years, according to a local government lobby group which says government cuts are widening England's economic divide.

A group of mainly urban councils says its calculations, based on cuts already pushed through and changes in local funding to come, suggest the average council in the north-east will lose £665 per person, compared with £305 in the south-east, by 2017-18.

Sigoma, the Special Interest Group of Municipal Authorities, representing large towns and cities in the northern, Midlands and south coast regions of England, accused the government of pushing some councils to breaking point and warned: "Any economic recovery may bypass parts of the UK."

But the government rejected the calculations and pointed to other figures suggesting some northern councils have considerably more spending power than the national average.

Sigoma, which is part of the Local Government Association, said its report took into account new funding structures and welfare changes. It argued that the changes meant councils suffering the largest cuts were often those facing the highest costs.

Its report, timed to coincide with an opposition day debate on the cost of living, said: "The government has failed to consider the cumulative impact of their reforms on councils, only assessing one change at a time. The large number of changes means that the same councils are being hit again and again with cuts in funding. Following years of disproportionate funding cuts councils have had to find significant savings so far; with opportunities for further savings now harder to find and given the rising cost of adult social care, some services are now at breaking point."

The councils are calling on the chancellor, George Osborne, to heed their warning that services will suffer as he prepares to present his autumn statement next week, when he will outline government tax and spending plans.

Steve Houghton, Sigoma chair and leader of Barnsley council, said his group's assessment "shows the government's complete disregard for the mounting pressure faced by certain councils and the pain it is causing their residents".

He added: "The government must make fair funding a key priority to allow councils to provide essential services without the growing distraction of a service failure."

However, local government minister Brandon Lewis rejected the report. "This crude lobbying exercise is based on made-up extrapolations designed to scaremonger rather than inform public debate. Council funding is fair to north, south, rural and urban areas. It is distributed to ensure the smallest reductions for the councils most reliant on government support," he said.

He referred to documents from the House of Commons library that showed that north of England councils have more spending power per household than their southern counterparts. "This year Newcastle has a spending power per household which is £300 more than the national average and £700 more than Wokingham, for example," Lewis added.

Labour says it will use its opposition day – when opposition parties can choose a topic for debate – to highlight a "growing cost of living crisis" across Britain caused by prices rising faster than wages. The party says London, Yorkshire and the Humber, the North West, Wales and the East of England have seen the biggest falls in real wages since 2010.

A separate report warns of a growing north-south divide in the jobs market as a southern construction boom fuels demand for workers in the south.

The focus on homebuilding and infrastructure projects like Crossrail in the South has seen almost half of the 55,663 construction vacancies advertised in October fall in London and the South East, according to a monthly labour market report from jobs search website Adzuna. Only 6% of advertised vacancies were in the North West and 3% were in the North East.

Across all sectors of the economy nine of the top ten cities to find a job are in the South, where there are twice as many vacancies as jobseekers, Adzuna said. Nine of the worst ten cities to find a job are in the North, with more than 20 jobseekers for each vacancy in Salford, the Wirral, Sunderland, and Hull

Article Source : http://www.guardian.co.uk
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Economic recovery? Bricks and motors build the evidence

Is this for real? The City certainly thinks the economy is finally emerging from the long, dark tunnel of stagnation into the sunlight of strong growth. That's why sterling and the interest rates on government gilts were up on Thursday. A recent run of strong data has convinced the financial markets that this time there will be no setback.

Houses and cars provided the latest evidence of recovery. That's significant because buying a home and buying a car represent the two big-ticket items of consumer spending. If the lipstick index is the barometer of the little treats people give themselves when times are bad, then the number of people putting their foot on the property ladder is a good guide to an economy starting to gather momentum.

So it is of some significance that the report from LSL property services showed that the number of first-time buyers was up by 45% between July 2012 and July 2013. The figure was the highest for any month since November 2007, when the financial crisis was still in its infancy.

The monthly sales report from the Society of Motor Manufacturers and Traders told a similar story. Indeed, the strength of new car sales by private buyers has been evident for the past 18 months and was one of the few positive signs during the flat-lining of the economy during 2012.

True, there may have been some special factors involved. There is some evidence that consumers have been using their compensation from miss-sold protection payment insurance as the deposits for a new car. Higher petrol prices have created incentives to trade in gas guzzlers for more fuel-efficient models. Motorists have been wooed by some smart promotions by dealers.

All that said, though, the year-on-year rates of growth reported by the SMMT are still impressively strong. Private car sales were almost 15% higher in August 2013 than they were a year earlier, and in the first eight months of 2013 they were up by more than 16%.

The data for first-time buyers and car sales reinforced the impression provided by the three surveys of manufacturing, construction and services from the CIPS/Markit earlier in the week. But snapshots of business confidence are one thing; people actually committing themselves to 25-year home loans and finance agreements quite another.

In the City, there was plenty of interest in how the Bank of England would respond to this batch of upbeat news. After the July meeting of Threadneedle Street's monetary policy committee, the first chaired by Mark Carney, the Bank issued a statement in which it sought to bring a halt to the upward drift in market interest rates which it fears could, if left unchecked, threaten the recovery.

Two months of strong data and a further increase in market interest rates later, however, there was radio silence from the Bank. No suggestion that the markets were getting ahead of themselves. No attempt to talk down rates. No suggestion that Threadneedle Street had a plan up its sleeve that would reverse the upward trend in gilt yields.

"This is quite a bizarre strategy by the Bank," said Nick Parsons, head of strategy at National Australia Bank. "If it issues a statement when it is not happy with the level of rates, the absence of a statement implies they are happy with the level of rates."

The lack of a statement did indeed lead to interest rates on 10-year gilts edging towards 3% and the pound rising against the dollar and the euro. It is hard to believe, however, that the Bank is happy with this state of affairs. It still believes that a premature tightening of policy could choke off nascent growth. But with the City paying more heed to evidence of an incipient housing boom than to Carney's forward guidance, it is at a loss as to what to do next.

Article Source : http://www.guardian.co.uk

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