A campaign begun in Jesmond is now being discussed in parliament, after local councillors uncovered a major flaw with how the government funds authorities across the UK. 

Full time students in the UK are currently exempt from paying council tax, a policy designed to ease financial pressures on those in higher education. But in areas with large student populations, such as Jesmond, it may also be contributing to a growing gap in local authorities’ financing.

North Jesmond councillors James Coles and Peter Allen were the first to spot just how wide this gap has become. After examining local figures, they found that Newcastle City Council is losing out on nearly £22 million of income annually due to the growing number of students, and therefore council tax-free properties. 

The central government does allocate money to offset this lost income using a grant funding formula. But when the North Jesmond councillors investigated this process further, they found that this formula has not been updated since 2013. Councils are still being compensated based on figures from more than a decade ago, despite considerable increases in student populations and council tax rates since then. 

“The formula needs to reflect the real situation rather than the one 12 years ago,” Allen told JesmondLocal.

Council tax accounts for a third of a local authority’s income, so the outdated formula has had significant impact across Newcastle. In fact, the local authority cut £20 million from their budget last year – cuts that councillors say could have been avoided if government funding had been calculated correctly.

Allen said fairer funding would make a “visible difference” across Jesmond, such as helping to clean the streets, improve car parking solutions, support local businesses and deliver numerous long-awaited improvements in Jesmond Dene. 

Jesmond resident Emma Painter said she agreed with the benefits this could provide. “A big issue I’ve noticed is the amount of litter and how stretched community services sometimes feel,” she said, “so extra funding could really help tackle that.”

“It’s great to see the real impact that local councils can make when they stand up for their communities and push for change at a national level.” – Emma Painter, Jesmond Resident

Coles and Allen took their findings to Liberal Democrat colleague Lord Shipley who raised it in the House of Lords in June. In response, a government official indicated that it intends to review the funding formula for local authorities with more student-exempt properties. However, the North Jesmond councillors say the solution lies not in charging students council tax, but in ensuring local authorities are fairly compensated for the services they provide.

“I’m glad the government has recognised that student cities need this funding, and look forward to seeing the change that’s required,” said Allen. Coles said the impact of a recalculation “is going to be felt nationally”.