Economy and Infrastructure

14.09.17

Councils raise service quality concerns as budget pressures start to bite

Councils have this week expressed serious concern that they will not be able to maintain high service quality under the current rate of budget cuts from central government.

Research conducted by the Institute for Fiscal Studies (IFS) looked at surveys from the Local Government Information Unit (LGiU) and PwC to get a clear picture of local government’s views on how cuts have affected service quality, and the impact of the business rates retention scheme on (BRRS) revenues and incentives.

Though 89% of respondents to the LGiU’s survey said service quality was maintained in the last year, many councils reported not being confident that this could be kept up in the future.

Just one in three said they were confident that significant reductions in quality could be avoided over the next three years, with the figure falling to one in six over the next five years.

And respondents from ‘upper-tier’ councils with responsibility for social care stated that they were even less confident of services being run smoothly in the short term. Three quarters of these respondents said that cuts to budgets would be apparent to the public in 2017-18 as service quality dropped due to a lack of funds.

PwC’s survey also raised more worries about the lack of clarity around the upcoming reform to business rates retention.

Two-thirds of decision-makers said they were currently unable to ascertain whether their council has gained or lost financially from the BRRS, possibly because they are unsure what the funding system would otherwise have looked like, or due to the complexity of the scheme.

In addition, though 40% of councils expected that 100% retention would incentivise local economic growth, only 23% expected their authority to financially gain from the policy change.

This latest warning comes in the same week that a Basildon councillor criticised Sajid Javid for failing to respond to his letter asking for clarity on council finances and upcoming business rates changes.

“Officials and politicians from councils that we estimate have done well out of the business rates retention system so far, and where recent economic growth has been faster, are significantly more confident that the proposed 100% rates retention scheme would benefit their council,” said David Phillips, associate director at the IFS, and an author of the report.

“This is perhaps unsurprising. But such confidence may be misplaced. Other research shows that over the period 2008 to 2015, at least, there was remarkably little link between local economic growth and increases in the business rates tax base.

“In other words, rapid economic growth does not guarantee good business rates performance, and vice versa.”

Jonathan Carr-West, chief executive of the LGiU, argued that councils currently had little certainty as to how they will be funded beyond 2020.

“The impact of 100% Business Rate Retention looks increasingly uncertain. For councils, who have been told in recent years that they should be investing in their local economy so that they will be able to fund themselves through business rates post-2020, the current lack of policy direction adds yet another layer of uncertainty and complexity to their financial planning,” he explained.

“There is now an opportunity to have a rethink about how we broaden the local tax base to create a sustainable way of funding services in the long term. More creative approaches to fiscal devolution were ruled out of the initial round of devolution talks: it’s time to revisit them.”

Have you got a story to tell? Would you like to become a PSE columnist? If so, click here

Comments

There are no comments. Why not be the first?

Add your comment

 

related

public sector executive tv

more videos >

latest public sector news

Sheffield City Region announces major housing pilot

23/11/2017Sheffield City Region announces major housing pilot

Sheffield City Region (SCR) will begin to assess applications for new housing schemes as part of an £8m pilot project across the area. ... more >
London council to launch ‘ethical debt collection’ for residents

23/11/2017London council to launch ‘ethical debt collection’ for residents

Hammersmith and Fulham Council (H & F) have launched “ethical debt collections” service in a bid to reduce costs to residents. ... more >
Council told to reimburse Suffolk woman charged for care she never received

23/11/2017Council told to reimburse Suffolk woman charged for care she never received

Suffolk County Council has been hit by criticism from the Local Government and Social Care Ombudsman (LGO) after a woman was wrongly charged for ... more >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this... read more >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the o... more > more last word articles >
Sheffield City Region announces major housing pilot

23/11/2017Sheffield City Region announces major housing pilot

Sheffield City Region (SCR) will begin to assess applications for new housing schemes as part of an £8m pilot project across the area. The Housing Fund closed applications last week af... more >
London council to launch ‘ethical debt collection’ for residents

23/11/2017London council to launch ‘ethical debt collection’ for residents

Hammersmith and Fulham Council (H & F) have launched “ethical debt collections” service in a bid to reduce costs to residents. The council are working with a private firm on ... more >

the raven's daily blog

City-centric, deeply disappointing and a nightmare – criticisms pile against the Budget

22/11/2017City-centric, deeply disappointing and a nightmare – criticisms pile against the Budget

It’s been a busy day in the PSE office. Philip Hammond’s Autumn Budget included a number of interesting announcements, ranging from new devolution deals and housing measures to changes to business rates. This year’s Statement was described well by Lord Bob Kerslake, who said it had been a “mixed bag” for hous... more >
read more blog posts from 'the raven' >

comment

Driving forward a healthier Scotland

10/11/2017Driving forward a healthier Scotland

Dundee City Council is leading the way in boosting electric vehicle (EV) uptake in Scotland, writes Rebecca Wallace from the local authority&rsqu... more >
A smarter approach to digital transformation

10/11/2017A smarter approach to digital transformation

Catherine Bright, Smarter Digital Services (SDS) manager, explains how a partnership of 12 councils across Kent and Surrey are jointly funding a ... more >
Delivering on estates

10/11/2017Delivering on estates

Sam Ulyatt, strategic category commercial director at the Crown Commercial Service (CCS), on how a new framework can help public sector organisat... more >
Open for business

10/11/2017Open for business

Clare Moore, senior specialist of valuation and disposals at the Homes and Communities Agency (HCA), explains how public sector bodies looking to... more >

interviews

‘The HSCN is the realisation of industry best practice’

30/06/2017‘The HSCN is the realisation of industry best practice’

Keith Smith, public sector business development manager at Virgin Media Business, tells PSE’s Luana Salles that health and social care orga... more >
HSCN: The enabler for a more joined-up public sector

26/06/2017HSCN: The enabler for a more joined-up public sector

Mark Hall, Chief Assurance Officer at Redcentric, discusses NHS Digital’s project, the new Health and Social Care Network (HSCN) and what b... more >
Maintaining the momentum for further devolution

25/04/2017Maintaining the momentum for further devolution

Ahead of this year’s mayoral elections, Lord Kerslake, the former head of the Civil Service, tells PSE’s David Stevenson why the argu... more >
New social care funding misses the point

13/04/2017New social care funding misses the point

Clive Betts MP, chair of the Communities and Local Government (CLG) Committee, reflects on the social care funding released in this year’s ... more >

public sector focus

View all News