HIGHER REGIONAL COSTS MUST BE RECOGNISED TO PROTECT SERVICES

Higher regional costs must be recognised to protect public services, according to leading Councillors at the recent launch in London of a new report by two leading economists.

The report by David Blanchflower, Professor of Labour Economics at Dartmouth College, USA and Andrew Oswald, Professor of Economics at the University of Warwick, shows that Government funding does not adequately reflect the additional costs of providing services in the South East and other regions such as the West Midlands and Greater Manchester. It recommends that Government funding for local services, such as education and social service, should reflect regional differences in private sector pay.

Cllr Keith House, Liberal Democrat Vice-Chair of the Regional Assembly, said: "We believe this report shows a way forward which can ensure public services, not just in London and the South East, but in other high cost regions can continue to improve.

"At the launch of the report, it was very encouraging to hear MPs and local authority councillors from across all the major political parties agreeing that this is a very real crisis which needs to be resolved in order to ensure that the economic prosperity of all these regions does not suffer."

Andrew Oswald, report author, said: "The present funding arrangement, the Area Cost Adjustment, is calculated on the basis of a comparison with wages of public sector workers in other parts of the country. This is a circular calculation which is leaving public services in the London and the South East struggling to attract and retain key workers.

"The Government grant formula needs to be modernised. Fair funding requires a 'high cost element', calculated on the basis of a comparison with private sector wages which more accurately reflect the cost of attracting and retaining staff."

For further information, please contact James Odling-Smee, Head of Communications, Hertfordshire County Council on 0850 0073820.

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Notes to editors:

1. The Regional Assembly is the “voluntary regional chamber” for the South East. It was established in January 1999 to give a representative voice to the South East region which covers Berkshire, Buckinghamshire, East and West Sussex, Hampshire, Isle of Wight, Kent, Oxfordshire, and Surrey.
2. The Assembly is made up of 111 members including elected councillors nominated by the region’s local authorities and 37 representatives from other sectors of the community (including business, trades unions, education, housing, health, sports, culture, tourism, faith groups, environmental, community and voluntary organisations).
3. The Assembly has three areas of core business:
1. It is the representative voice of the South East, engaging and representing its member organisations and, through them, the wider public.
2. The Assembly has a specific role under the Regional Development Agencies' Act 1998 to ensure the accountability of the South East England Development Agency (SEEDA) to the region.
3. The Assembly has been the Regional Planning Body for the South East since April 2001. It has responsibility for proposing strategic planning and transport policies to Government.

Last updated: 21 August 2007