Spending cuts push councils to 'verge of tipping point'

Published on Monday, 12 May 2014 10:18
Written by Govtoday staff

Popular local services like leisure facilities, children's centres and pothole repairs are likely to bear the brunt of funding cuts over the next two years, a survey of councils' financial strategies suggests.

Following £10bn worth of cuts in the past three years many councils are starting to reach 'the end of the road' for saving money through becoming more efficient.

Research carried out by the Local Government Association suggests that the impact of spending reductions will start to become increasingly visible over the next two years, as councils tackle a further £10bn cut in government funding.

In many areas where the well of efficiency savings has run dry, councils are on the verge of a tipping point where they will not have enough money to meet all their statutory responsibilities.

Government funding given to councils to run local services will have been cut by 40% by May 2015. LGA modelling, which factors in reduced funding and rising demand for adult social care, shows that money available to provide popular services like running gyms, parks, libraries and youth centres is likely to shrink by 66% by the end of the decade.

The LGA surveyed councils in England about their strategies for dealing with the next round of cuts. The results, set out in the Under Pressure report published today, provide a snapshot of the financial health of local government and show that:

  • 2015/16 is the year in which three in five councils say there are no efficiencies left to be made or efficiencies alone will not be enough to tackle that year's cuts. They will be unable to meet their budget gap solely through efficiency savings.
  • One in five councils believes next year's cuts can be covered by efficiency savings alone.
  • Two in five councils will be looking to stem the impact of cuts by raising more income through investment, fees and charges. This could include councils increasing charges for discretionary services like leisure centres to a level where they are self-funding and less reliant on money raised through taxation.
  • Almost half of councils (48%) are set to use money set aside in reserves as a short-term fix to balance budgets and delay the impact of cuts next year. These one-off pots of money are set aside for dealing with emergencies, such as the recent floods, and major infrastructure projects.

Cllr Gerald Vernon-Jackson, vice-chairman of the LGA, said: "It is testament to councils' resilience that many people have noticed relatively little difference in most of their local services over the past three years.

"Faced with the biggest cuts in living memory, councils have restructured and shared services where it has been possible and have made the most efficient part of the public sector even more efficient. However, efficiency savings cannot be remade and we are now reaching the end of the road.

"Local authorities have strived to shield residents from the impact of cuts, but with another £20bn worth of savings to be found, we're approaching a tipping point where options are fast running out. The next two years will be the toughest yet for those who use and rely upon the popular local services councils provide.

"Many councils are likely to need to spend reserves set aside for emergencies and long-term investments just to balance the books over the next two years. This short-term fix will delay the impact of looming cuts, but it will store up further difficulties in the long-term as reserves run dry.

"Local government has led the way at improving and modernising the way we do things but further cuts will lead to fewer and poorer services unless government commits to a new way of working. The clock is fast running down on government's opportunity to do this before the standard of popular services really start to suffer.

"We need to find a better way to ensure public money gets to the frontline where it is most needed and doesn't get lost in the maze of Whitehall. Otherwise we risk sleepwalking into a situation where an upturn in the economy coincides with a decline in public services."

Source: LGA

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