Latest Public Sector News

20.10.15

Slashing vital services would still not save enough to plug looming deficit

Even if councils stop providing eight vital services entirely, the cash saved would still not be enough to plug the potential £20bn funding hole threat posed by the upcoming Spending Review, the LGA has said.

In its submission to the Spending Review, the LGA predicted that councils will face a shortfall of nearly £10bn by 2020 thanks to separate cost pressures, government policies and inflation – even before any cuts are made.

And with chancellor George Osborne’s Spending Review just around the corner, for which he asked unprotected departments to model 40% cuts, local authorities may face a shortfall of £20bn in funding by the end of the decade.

This black hole in local public purses would be so great that, even if councils stopped providing bin collection and recycling, arts and leisure, road maintenance, subsidised bus services, street cleaning, parks maintenance, street lighting and trading standards, it would still not be able to plug the funding gap.

Conservative Lord Gary Porter, LGA chair, said: “Councils are under no illusions about the challenges that lie ahead. We know we face almost £10bn in cost pressures by 2020 even before the prospect of further challenging funding reductions over the next four years.

“What is clear is that another 40% real terms reduction to local government grant funding on top of these cannot be an option on November 25.

“It is a false economy to reduce funding to local government while attempting to prop up other departments. Providing councils with fairer funding is the only way to avoid the unintended consequence of other parts of the public sector, such as the NHS, being left to pick up the financial pieces.

“When making its spending decisions government must consider the huge pressures funding reductions to councils would have, not just on vital local services but on the public sector more widely.”

To contextualise the impact of cuts lying ahead, Porter said that closing every children’s centre in England would save £700m – only enough to plug the funding gap in the adult social care sector for one year.

And if councils stopped fixing the two million potholes filled each year, cash saved would still not be enough to provide free bus travel for elderly and disabled residents.

“These are the difficult decisions councils will be forced to face. Many of the things people take for granted, like clean and well-lit street, maintained parks and access to leisure centres, will become a thing of the past a result,” he continued.

LGA’s new prediction is also considerably above its July statement, where Porter said that councils would face a £7bn blow to the local government finance settlement if a 40% cut were applied.

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