By Daniel Hunter
The Government must not exacerbate the severe squeeze on funding for local services which is already set to reduce by 66 per cent the money available for things like filling potholes, funding cultural and leisure facilities, and helping businesses to create jobs and drive economic growth.
Four weeks out from the Autumn Statement, the Local Government Association has demanded a period of financial stability to allow councils to plan for the largest, most sustained cuts to the funding for local services since the war.
Councils are currently half way through a scheduled 43 per cent cut in funding from central government. Having delivered £10 billion of real-terms savings in the three years from 2011/12, local authorities have to find the same savings again in the next two years. As a result of these cuts, councils in many areas will not have enough money to meet all their statutory responsibilities.
The cuts, combined with the growing demand for social care, mean that the amount of money available to deliver non-social care services, including many of the services people value most, is predicted to shrink by 66 per cent by the end of the decade. This will mean much less money to spend on things like filling potholes and funding leisure facilities like pools, gyms and parks. It will also mean less money to spend on libraries and museums, and a significant reduction in the help that councils can provide to local businesses.
The LGA, which represents 373 councils in England and Wales, believes the Treasury has a binding obligation to deliver the grant funding it has committed to provide to local government in 2014/15 and 2015/16 and warns that a failure to meet the existing commitment will push even more councils beyond breaking point. The cuts already scheduled for those two years amount to 21 per cent of total funding and will bring to 43 per cent the total cuts to local authority funding announced by this Government.
The LGA is also calling on the Treasury to reverse its plans to withhold an extra £1 billion of local government funding in 2015/16 over and above the 10 per cent cut which will be made in that year. The £1 billion, which has been top-sliced from local government's funding, is being held back by central government partly to cover its own financial risks and pay for things which, under the "new burdens" rules, should be paid for by the Whitehall departments. Councils are demanding the up-front release of that money so it can be used to deliver vital everyday local services and are calling on the Government to ensure that new burdens are funded by the Treasury and not from cuts to existing council funding.
Councils are also demanding that local government collectively retain the full growth in the local share of business rates, including growth from inflation, without a corresponding reduction in grant funding. This is particularly important as under current funding arrangements the biggest impact of the cuts to local services will come at a time when growth may be moving toward a full recovery. In that situation residents would find it hard to understand why services are being reduced when the economy is visibly growing.
Local Government Association Chairman, Sir Merrick Cockell, said: "The next two years are make or break for many councils and the Chancellor has it in his power to either deliver a stable environment in which they can plan for the unprecedented challenges ahead, or he can deliver uncertainty and risk which will put even more stress on vital local services and push councils toward failure.
"This Government is testing the resilience of councils to breaking point and in many areas the cracks are starting to show. 2015/16 is shaping up as the crunch year and we expect some councils to be placed in a position where they do not have the money they need to meet their statutory obligations.
"The severe and unprecedented squeeze on funding is already going to reduce by 66 per cent the money available for some of the most highly visible and popular services council provide. The Government must not exacerbate that problem by deepening the cuts in the Autumn Statement. Councils need a period of stability and consistency so they can plan for the unprecedented challenges which lie ahead."
Join us on