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Councils ask for help after public finances hit biggest budget surplus in 18 years

Public sector finances seem to have taken a turn for the better as ONS figures show that net borrowing was in surplus by £2bn – double that of July last year, and the largest surplus for 18 years.

Key to this growth was a £1bn increase in self-assessed income tax receipts, a £0.4bn increase in PAYE receipts, and a £0.3bn increase in VAT receipts.

Borrowing was also at its lowest for 16 years, with figures from April to July this year hitting £12.8bn – that is, £8.5bn less than in the same period in 2017.

The borrowing to cover day-to-day activities was in surplus by £1.2bn, which marks the first annual budget surplus since the financial year ending March 2002 – although the ONS did emphasise that this is a provisional estimate and may be subject to revision.

Over the next 12 months, the body expects the public sector to borrow just over £37bn, or around one-quarter of what it did in the financial year ending March 2010, during the peak of the financial crisis.

Responding to the positive figures, the LGA’s resources board chair, Cllr Richard Watts, said: “Councils and their staff have strained every sinew to support local communities and economies through years of austerity. If public finances have improved, it is vital that the government addresses the growing funding gaps facing our local services.

“Investing in local government will boost economic growth, reduce demand for services and save money for the taxpayer and others part of the public sector, such as the NHS.”

His calls for more investment in local government comes after a handful of councils have either reached financial breaking point or are reportedly close to doing so. Northamptonshire’s insolvency has been widely reported in recent weeks, but other councils such as East Sussex, Somerset and Torbay may be following suit – with the latter recently banning all non-statutory spending.

“Councils have shouldered more than their fair share of austerity and have tried to reduce any impact on residents, but there is only so much they can do and the financial challenges they face are growing,” said Watts. “More and more councils are struggling to balance their books and others are considering whether they have the funding to even deliver their statutory requirements.”


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