The Mayor of Tower Hamlets has written to the Prime Minister urging her to rethink the so-called ‘Fair Funding’ review which could see millions in council funding diverted away from disadvantaged areas like Tower Hamlets to more affluent shire areas.

The ‘Fair Funding’ review, which will change the way local councils are funded, is planned to be introduced from 2020/21. An official consultation on the review ran from December 2018 to February 2019, with a response from the government expected soon.

The letter to Prime Minister highlights that government plans ‘propose a reduced focus on deprivation and population growth, both of which would have a major impact on Tower Hamlets.’

Recent analysis from the Local Government Chronicle (LGC) has found that more than half a billion pounds is likely to be diverted from London boroughs, mainly to shire areas.

The letter also highlights that the dwindling resources available to councils are increasingly being used to ‘plug the gaps’ left by cuts to other areas, for example Tower Hamlets Council spends millions of pounds to provide additional police officers and a hospital link-worker to tackle knife crime.

Tower Hamlets’ core funding from government is £148m or 64% less compared with 2010.

Highlighting the pressures on local government more widely, brand new figures from PricewaterhouseCoopers reveal that county councils may face ‘a funding black hole of over £50bn over the next six years’ and that councils may be forced to make ‘draconian cuts to local services’ and provide only ‘a basic, bare minimum core offer to residents.’

Mayor of Tower Hamlets John Biggs said: “Despite nearly a decade of cuts, we’ve been able to keep all our libraries, Idea Stores, leisure centres and children’s centres open. But there is real concern about what will happen to frontline services if the Fair Funding Review strips even more money out of boroughs like ours. Make no mistake, the choices are getting tougher.

“The Prime Minister can claim austerity is over, but by redistributing money out of boroughs like Tower Hamlets to wealthier shire areas it’s clear the truth is very different.”

Councillor Candida Ronald, Cabinet Member for Resources, said: “It would be an enormous mistake for the government to fail to take deprivation into account when deciding council funding. Areas like Tower Hamlets with high levels of deprivation will suffer when we’ve already seen significant cuts to our budgets. The government’s ongoing welfare reforms on top of continued cuts to council budgets are leading to dangerous impacts for the most vulnerable in our society.”

Full text of the letter sent to the PM:

Dear Prime Minister,

The ‘Fair Funding’ review threatens the future of our front line public services in Tower Hamlets. We call on you to review the proposed funding formula so it doesn’t adversely impact on inner city areas with a high level of deprivation like ours.

Tower Hamlets’ core funding from government is £148m or 64% less compared with 2010. While we contribute a huge amount to the UK economy, in terms of economic output being the third biggest contributor in terms of GDP, over half of our children are classed as living in poverty and our residents have borne the brunt of austerity. They face high housing costs and have felt the squeeze from welfare reforms.

As a council we have to save another £44m a year over the next 3 years, and while some of this funding has been replaced by other income, pressure on our services is increasing year-on-year. From caring for our most vulnerable older people, to pressure on children’s services, local authorities across the country are bearing the brunt of austerity.

We have managed to protect key frontline services by making savings to back office functions and reduced our staffing levels by around a third since 2010. However our services cannot take a further cut to their budget – our room for manoeuvre is extremely limited and the choices are getting tougher.

When you claimed that austerity is over we had hoped that would stop further cuts to our budgets. Rather than take money away from local authorities in some areas to shore up budgets in other areas, government needs to properly fund local authorities.

We know the so-called Fair Funding Review plans propose a reduced focus on deprivation and population growth, both of which would have a major impact on Tower Hamlets. We also have a much higher daytime population as we are home to Canary Wharf and the city fringe and any funding settlement should reflect this.

In other areas like policing, the cuts to other public services have put a strain on local authorities who are left to pick up the pieces. Our residents have expressed real concerns about community safety and we have had to use our limited resources to plug the gaps by funding additional police officers and more recently step in to fund a link-worker post at our local hospital to prevent knife crime; government funding to this vital post was cut. We can’t step in to meet the shortfall in every area.

With the government planning to implement Fair Funding from 2020-21 we need assurances now so we can plan for the future. A further slice to our budget would be disastrous and put frontline services at risk in a borough which suffers from high levels of deprivation.

When you became Prime Minister you said you would fight against burning injustices. We call on you to think again on ‘Fair Funding’.

I look forward to hearing from you.

Yours Sincerely
Mayor John Biggs