Over £7m investment lost locally due to cuts to council rates grant

The Chief Executive of Derry & Strabane Council John Kelpie.
The Chief Executive of Derry & Strabane Council John Kelpie.

Derry City & Strabane District Council is losing out in millions of pounds worth of capital investment due to cuts in rates support grants designed to help address budget imbalances for poorer councils.

Councillors will now write to leaders of political parties and government officials expressing concern following grant aid cuts totalling almost £500,000, which could have been used towards leveraging £7.2m funding for capital projects.

The warning was issued as councillors were informed of an overall positive financial outrun for the year to April, 2019 during which the local authority managed to save £871,000 despite increased pressures.
Lead Finance Officer, Alfie Dallas told the Governance & Strategic Planning Committee that this result was “represents prudent financial management.”

The overall budget for the council for 2018/19 was £58.45m. Of this, over £54.5m came from rates, while a reduced rates support grant of £3,325,833 was received.

Over £23m was spent on Environment & Regeneration, £10m on Health & Community and almost £8m on Business and Culture, while £4.1m was allocated to City of Derry Airport.

Overall, the council has managed to save over £3m since 2015 which was and is being reinvested into capital projects and the City Deal proposals.

Mr Dallas, in his report, stated that normally the funds saved this year would be similarly reinvested, but that the council “has been made aware of a number of very disappointing new financial pressures from Central Government for 2019/2020 totalling £197,000 in relation to Rates Support Grant cuts and transferred pension liabilities.”

As such, these new pressures will have to be offset by part of £871,000 savings and Mr. Dallas said that the council continues to apply pressure on the NI Civil Service to highlight the impact of the Support Grant cut.

Commenting on the reduction, Chief Executive John Kelpie told the committee that because Derry & Strabane received almost 20 per cent of the overall grant shared out among the councils, that the “impacts of it now are becoming quite extreme for this council.”

He said: “The big objective of this council is growth and jobs in the economy through a whole range of community projects and strategic projects and that requires us to make a very significant capital contribution. As we speak, we are £7m down in our ability to do that.”

Mr Kelpie warned that if the grant support continues to be cut, the council will not get to a point where inequality will be reduced to such an extent that they will no longer need this support.

Sinn Fein Colr. Paul Fleming thanked Colr. Dallas and his team for the work they had undertaken, while his party colleague Colr. Mickey Cooper said the approach by central government to the rates support grant was self-defeating. ”It is going to get more punitive year on year so the lobby mustcontinue,” he said. He also cautioned against Central Government using the City Deal as a way of suggesting that the region was doing okay.

SDLP Colr. Martin Reilly said: “It’s an indictment of our political process that we don’t have an Assembly, an Executive Minister to lobby here,” he said. “Ourselves and the other six councils are suffering as a result of that.”

Colr. Reilly suggested that given there was now a talks process that would, hopefully, lead to a restoration of the Executive, it might be wise to write to party leaders on this issue.

“Whoever becomes the relevant minister this is going to land on their desk straight away so it would be useful to take it to all parties in the negotiations about the cuts that have happened,” he said.

DUP Alderman Hilary McClintock said everyone should be alarmed at what is happening. “It is incumbent on all of us to raise this issue with the hierarchy of our parties,” she said, adding that this was “way above party politics.”