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Time to ease austerity

Simon Edwards, director of the County Councils Network (CCN), says counties need extra money in the upcoming Budget if the government is to succeed in tackling major domestic challenges.

The lifting of the police pay cap has added to the intrigue surrounding the lead-up to the Autumn Budget, as it signals that the government may begin to ease austerity.

Whilst the doomsday rhetoric surrounding local government funding is rarely away from the airwaves and in print, it is clear that for many CCN members, setting next year’s county budgets is shaping up to be the most difficult challenge yet.

Context is crucial here. During the coalition years, 40% was shaved from the average council budget, and significant year-on-year cuts have occurred since then. The phasing-out of Revenue Support Grant will hit counties the hardest: a 93% reduction on average by 2020.

CCN chairman Paul Carter recently told his cabinet colleagues at Kent County Council that he was worried frontline services would have to be cut next year unless more funding is found, while Northamptonshire County Council recently made the news after taking the unprecedented step of asking government to overspend its budget as long as it balances it within five years.

These scenarios are why the CCN has centred its Autumn Statement submission advocacy on securing additional resource for its 37 member authorities. It illustrates the severe demand-led pressures faced by counties due to demographic growth and decreasing budgets, which will now be compounded by factors such as inflation growth and the costs of implementing the new National Living Wage.

The social care funding crisis needs no introduction, despite the injection of £2bn outlined in the March Budget. However welcome this funding is, a myriad of issues persist within the social care system. Counties are responsible for 48% of the country’s total expenditure on adult social care services, and with their elderly populations set to rise by 2% year-on-year up to 2020, demand for services will only increase.

CCN also released figures over the summer illustrating the rise in demand for children’s services. Our member councils have seen referrals increase 107% in the last decade against a backdrop of reductions in other local authority areas, and have seen a 102% increase over the last 10 years in the number of children subject to a child protection plan – the second highest of all local authority types. Population growth is also driving demand in other areas, with counties estimating a collective additional cost of £167m in education.

This all paints a picture of huge unsustainability going forward. For a long time now, discretionary services have had a question mark hanging over them, but the reality now is that statutory, life-critical services are unfunded and therefore at risk. This is why CCN’s Budget submission calls for any extra funding to be prioritised towards adult social care and children’s services in the first instance.

Another potential cost pressure on the horizon is that of the public sector pay cap. With the government lifting the police cap, it is widely expected that the rest of the public sector will follow suit. CCN members welcome the premise, in recognition of the hard work of their employees shaping ambitious transformation projects to deliver critical public services for residents.

Yet it is paramount that this is fully funded by central government. Quite simply, local government does not have the means to finance any pay rise. Suggestions that this could be paid for through the use of reserves misunderstand the point of reserves and overlooks the issues of using a one-off fund to finance a yearly cost.

As well as putting forward a clear evidence base for extra resource, CCN’s submission also argues that counties can play a major part in the country’s post-Brexit fortunes. This builds on Oxford Economics’ recent report for CCN, which illustrates the importance of the 37 county economies to the country’s financial wellbeing. To that end, the submission argues for a more prominent role for counties in the forthcoming final Industrial Strategy, and their endorsement as strategic authorities to lead place-based economic growth locally and do business with government nationally.

The government faces big domestic challenges: the need to get local economies thriving, rising house prices and pressures on public services, to name but three. None of these challenges can be met head-on without proper foundations being in place – starting with closing the widening funding gap CCN member councils face. If austerity is eased, then counties should be near the top of the list for an extra injection of money.




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