Councils face collapse through cuts

Published on Friday, 07 June 2013 10:47
Posted by Scott Buckler

The Public Accounts Committee publishes its 3rd Report of this Session which, on the basis of evidence from the Local Government Association (LGA) and Professor Tony Travers of the London School of Economics, and from the Department for Communities and Local Government, examined the financial sustainability of local authorities

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said:

"Central government is cutting funding to local authorities by more than a quarter over four years but does not properly understand what the overall impact will be on local services.

"Departments have provided some information on possible impacts but it was superficial and incomplete. For instance, the Department for Education has failed to provide a proper cost analysis of how funding reductions will affect services to children.

"Nor has enough work been carried out across government departments to determine how funding reductions in one area of spending might affect services in another: for example, how cuts in local authority adult social care might lead to bed blocking in hospitals.

"Individual councils are seeing very different levels of funding reductions. For some, the cash they spend on services has been reduced by about 1% in 2012-13. Others have had the maximum reduction of nearly 9%.

"The more grant dependent local authorities are suffering the highest reductions in spending power. But these are the very councils which serve poorer and more vulnerable communities whose need for services is the greatest.

"This raises the spectre of the worst-affected councils being unable to meet their statutory obligations. In some cases local authorities may cease to be viable, with the first such authority already identified. The Department must understand better the impact of its cuts on vulnerable groups.  We also want to know what actions it would take in the event of multiple financial failures of local authorities.

"Local authorities are tending to cope with funding reductions. But in the long term there might well be little room for further efficiency gains and services would have to be cut.  There needs to be frank and open dialogue between central and local government and the public on just what services councils will be expected to provide in a prolonged period of declining funding."

Margaret Hodge was speaking as the Committee published its 3rd Report of this Session which, on the basis of evidence from the Local Government Association (LGA) and Professor Tony Travers of the London School of Economics, and from the Department for Communities and Local Government, examined the financial sustainability of local authorities.

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