Economy and Infrastructure

08.03.18

NAO: Councils financial situation ‘not sustainable’

The National Audit Office (NAO) has today warned central government that the state of local authority finances is “not sustainable” as lack of funding cuts away at services.

In a new report on the financial future of councils, the watchdog has laid bare the issues and claims that many authorities have been forced to begin using their savings reserves to combat “a range of new demand and cost pressures.”

There has been a real-terms reduction in government funding of nearly 50% since 2010, the NAO says, causing a 33% drop in service spending.

This has hit font-line services most prominently, with nearly a third of households across the country having their waste collected less frequently and one in ten libraries closing.

“Local authorities face a range of new demand and cost pressures while their statutory obligations have not been reduced. Non-social-care budgets have already been reduced substantially, so many authorities have less room for manoeuvre in finding further savings,” the report says.

“The scope for local discretion in service provision is also eroding even as local authorities strive to generate alternative income streams. The current pattern of growing overspends on services and dwindling reserves exhibited by an increasing number of authorities is not sustainable over the medium term.”

It goes on to explain that the solutions government have put in place to try and deal with these increasing pressures are not expected to make a long-term difference.

“Current funding for local authorities is characterised by one-off and short-term fixes, many of which come with centrally driven conditions,” said Amyas Morse, head of the NAO.

“This restricts the capacity of local authorities and yet the weight of responsibility to respond to increased demand and maintain services remains very much on their shoulders.”

In addition to other reductions, the report found a 52% reduction in spending on planning and development, 45% on housing, 37% on highways and transport, and around 35% on cultural and related services.

The figures have prompted fears from councils about the future of local government, with the LGA pointing to “significant funding challenges” and “years of unprecedented funding reductions.”

“Councils’ ability to maintain local services at a time of inadequate resources and rising costs is already extremely stretched, and the NAO rightly warns about the huge uncertainty over how the government intends to fund local services after 2020,” said Lord Porter, LGA chairman.

“Core central government funding to councils will be further cut in half over the next two years and almost phased out completely by the end of the decade.

“The government needs to urgently address this cliff-edge and the growing funding gaps facing local services. It also needs to provide the financial sustainability and certainty needed to protect the local services our communities rely on into the next decade and beyond by committing to allow local government as a whole to keep every penny of business rates collected.”

The problems of funding reached a head in early February, when Northamptonshire County Council issued the first spending ban in 20 years, citing “severe financial challenges.”

Top image: Alphotographic

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

Midlands council saved £1.5m through combatting tenancy fraud

21/06/2018Midlands council saved £1.5m through combatting tenancy fraud

Tenancy fraud cost Solihull Council almost £1.58m last year, according to recent figures. A report presented to the council’s audit ... more >
Local government funding cuts threaten half of bus routes

21/06/2018Local government funding cuts threaten half of bus routes

Almost half of all bus routes in England are under threat due to partial or incomplete subsidies from councils, the Local Government Association (L... more >
London council demands credit card details by email

21/06/2018London council demands credit card details by email

A London council is reviewing its data protection precautions after it was revealed that residents were told to share payment card detail via email... 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 >
Midlands council saved £1.5m through combatting tenancy fraud

21/06/2018Midlands council saved £1.5m through combatting tenancy fraud

Tenancy fraud cost Solihull Council almost £1.58m last year, according to recent figures. A report presented to the council’s audit committee revealed that, since April 2017, 17 coun... more >
Local government funding cuts threaten half of bus routes

21/06/2018Local government funding cuts threaten half of bus routes

Almost half of all bus routes in England are under threat due to partial or incomplete subsidies from councils, the Local Government Association (LGA) has warned. According to the LGA, ongoing f... more >

the raven's daily blog

The work of the vanguards can help overcome the challenges of integrated care

29/05/2018The work of the vanguards can help overcome the challenges of integrated care

Following the announcement of the second wave of integrated care systems (ICSs), NHS Providers, the NHS Confederation, NHS Clinical Commissioners (NHSCC) and the LGA reflect on how lessons learnt by members from across the four organisations – that have designed and worked together as part of the vanguards – will support the j... more >
read more blog posts from 'the raven' >

comment

Grenfell, one year on

18/06/2018Grenfell, one year on

In the year since the Grenfell Tower disaster, the LGA has been working tirelessly to ramp up fire safety regulations and ban ‘desktop&rsqu... more >
Brexit's long shadow over devolution

18/06/2018Brexit's long shadow over devolution

The EU Referendum and the stop-start Brexit negotiations have left a looming shadow of uncertainty over devolution in the UK, writes Anthony Sala... more >
Decisions, decisions

18/06/2018Decisions, decisions

The true social value of procurement comes from asking challenging questions and thinking outside the box, argues Melissa Bell, sustainable procu... more >
Finding the balance

18/06/2018Finding the balance

Douglas White, head of advocacy at the Carnegie UK Trust, evaluates the risk-benefit relationship of data sharing within the public sector, highl... more >

interviews

Data at the heart of digital transformation

03/04/2018Data at the heart of digital transformation

SPONSORED INTERVIEW Grant Caley, UK & Ireland chief technologist at NetApp, speaks to PSE’s Luana Salles about the benefits of movin... more >
GDPR: The public sector scarecrow

03/04/2018GDPR: The public sector scarecrow

SPONSORED INTERVIEW PSE’s Josh Mines chats to Martin de Martini, CIO of Y Soft, about what the General Data Protection Regulation (GDPR)... more >
Keeping London safe

05/03/2018Keeping London safe

Theo Blackwell, London’s first-ever chief digital officer (CDO), speaks to PSE’s Luana Salles about the role he plays in ensuring the... more >
BIM: Digitising the public sector

19/02/2018BIM: Digitising the public sector

PSE’s Josh Mines talks to Stephen Crompton, CTO at GroupBC, and Stuart Bell, the company’s sales and marketing director, about how Bu... more >

public sector focus

  • 12/06/2018G-Cloud 10: small changes, big opportunities

    Rafael Cortes, Foehn head of marketing, explains how G-Cloud 10 should be a catalyst for innovative solutions and not a source of complacency. It was...
  • 04/06/2018Targets and tribulations

    David Willett, corporate director at The Open University, walks us through the university’s research into the apprenticeship levy, as well as...
  • 30/04/2018The legacy of Grenfell

    PSE’s Seamus McDonnell looks at the reactions of councils and the government to the Grenfell Tower fire, from the immediate aftermath to the...
View all News