Government confusion creates further financial challenges for Sheffield, council claims

Sheffield Town Hall.
Sheffield Town Hall.
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National uncertainty over local authority funding is putting Sheffield's future finances at risk, according to council bosses.

The city council has been trying to cope with annual cuts to central funding since the Coalition Government came into power in 2010.

Sheffield has known for some time that it will lose the pot of money known as the revenue support grant by 2020.

The funding has been gradually dropping year by year. But the Government had proposed to offset the loss of the grant by allowing councils such as Sheffield to keep all the tax they collect from businesses through a new Local Government Finance Bill.

Currently the council gets to keep 49 per cent of business rates, and that makes up about a quarter of the money used to fund city services.

The hope was that by keeping the remaining 51 per cent, the budget gap in Sheffield would not be as harmful as it could otherwise have been.

But a report to Wednesday's cabinet meeting warned councillors that the removal of the Local Government Finance Bill from the Queen's Speech following the General Election has cast doubt on whether or not Sheffield will get to keep all its business rates by 2020.

Head of strategic finance Dave Phillips told councillors there was a lot of uncertainty ahead.

"There have been no policy announcements on what's happening or potential alternatives," he said.

Since 2013/14, the council says it has lost £125 million of revenue support grant funding. In 2013/14 Sheffield got £192.5 million from the Government, while this year it will get £67.8 million.

Total grant reductions since 2010 - from 19 different sources - stand at £200m.

The council has assumed in its financial planning that there will be no further revenue support grant beyond 2020 - although Mr Phillips said assumptions were 'dangerous', and also warned of further changes should there be another General Election.

But councillors were told that increasing demand for services combined with declining budgets were creating 'significant challenges'.

"As time goes on it gets harder and harder to find ways to continue to meet service pressures," said Mr Philips.

There was some good news for adult social care, which will receive a £24 million boost in funding over the next three years.

Cabinet yesterday approved a plan to spend £9.8 million of the government cash to boost the pay of carers, £5.9 million on bed-blocking and the transfer delays from hospital to care environments and £8.3 million to support services under 'significant pressure', including mental health and services for people with learning disabilities.