Council Leader Hits Back Over Government Funding As Island Faces Growing Financial Crisis

The Leader of the Isle of Wight Council has issued a strong response after receiving a letter from the Government’s Local Government Minister, saying it fails to address the Island’s worsening financial situation.

Councillor Phil Jordan says the correspondence focuses on national funding increases while overlooking what’s happening locally.

He said the Minister’s comments “talk at length about national totals but ignore the stark reality facing the Isle of Wight, where Government funding is actually going down, not up.”

Despite national rises in Core Spending Power, the Council says changes linked to the Fair Funding Review and provisional settlement will see Government funding to the Island fall by more than £13 million over the next three years.

Cllr Jordan says these reductions have already been confirmed in financial assessments and independent reports, adding it’s “not credible” to rely on national averages when published figures show the Island losing funding.

The Council has also renewed calls for recognition of the so-called “Island premium” — the estimated £20 to £24 million extra it costs each year to deliver statutory services compared with similar mainland authorities.

These additional costs include transport, staffing, logistics, limited economies of scale and pressures created by millions of visitors.

Cllr Jordan says the Minister’s letter makes no reference to this, despite years of evidence being shared with Government.

He added that the Fair Funding Review has left the Island worse off, not better, with the Council warning its structural deficit could reach £44 million by 2028/29 — and potentially £65 million the following year without intervention.

The Leader also criticised suggestions that councils seek Exceptional Financial Support, which is offered as a loan rather than a grant.

He warned that borrowing to cover a structural deficit simply shifts today’s problems onto future residents.

The Council estimates that borrowing to address a £55 million gap could cost Islanders up to £94 million in repayments over 20 years.

The authority is now urging Government to formally respond to its proposed Island Deal, which sets out the case for a £24 million annual uplift to deliver essential services sustainably.

Cllr Jordan says the Council has one of the clearest evidence bases in the country and is asking how the Isle of Wight can be expected to set a lawful and sustainable budget when funding is falling and unavoidable island costs are not recognised.

Urgent talks with Ministers are being sought ahead of the next budget cycle, with both local MPs now informed of the situation.