Latest Public Sector News

01.10.18

Plans to cut further £1.3bn of local government funding will ‘tip many councils over the edge’

A major source of local government funding is set to be slashed by £1.3bn next year, the biggest cuts to government funding since 2010 despite already “unprecedented” pressures on councils across the UK.

The LGA has revealed a total of 168 councils, almost half of all UK councils, will no longer receive the Revenue Support Grant next year.

The main grant funding from central government will be cut by 36% in 2019/2020, which means councils will have suffered a 60% decrease in government provided funding for services, according to the LGA.

Cash-strapped councils up and down the country have made sweeping cuts in recent months to balance budget deficits, and now local council leaders have warned that the financial viability of more councils is now further “under threat.”

Funding pressures and rising demand for services, such as adult and children’s social care and providing care for the elderly and disabled, will likely leave local services in England facing a £3.9bn funding black hole next year nationwide.

Richard Watts, chair of the LGA’s Resources Board, said: “Losing a further £1.3bn of central government funding at this time is going to tip many councils over the edge.

“Many local authorities will reach the point where they only have the funds to provide statutory responsibilities and it will be our local communities and economies who will suffer the consequences.

“In his Spring Statement in March, the chancellor said he would invest in public services if public finances improve as recent forecasts have suggested. It is therefore vital that the government addresses the growing funding gaps facing councils in 2019/20 in the Autumn Budget.”

The LGA has called for Phillip Hammond to use the Autumn budget to tackle the immediate funding crisis in 2019/20 and set out a model, called the ‘Anycouncil’ model, mapping the likely impact of a further year of central government funding cuts for an average upper-tier council.

Watts added: “If the government fails to adequately fund local government there is a real risk to the future financial viability of some services and councils.

“If the residents of Anycouncil face the prospect of closures to leisure centres and libraries, cuts to vital home care for the elderly and more potholes on local roads, then millions of residents are living in areas where their council will be forced to do the same.

“Investing in local government is good for the nation’s prosperity, economic growth and for the health and well-being of our nation. It will boost economic growth, reduce demand for services and save money for the taxpayer and others part of the public sector.”

Northamptonshire County Council’s financial struggles have been widely reported after it was issued its second Section 114, and the council has since voted in favour of proposals to create a unitary authority.

Other authorities such as Somerset council are amongst those already facing significant budget deficits.

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Image credit - RBOZUK

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