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LGA - Councils could face £3.3 billion funding reduction in 2016/17
Councils in England could face a £3.3 billion reduction in central government funding for local services in 2016/17, the LGA reveals in its latest report.
Councils in England could face a £3.3 billion reduction in central government funding for local services in 2016/17, new analysis by the Local Government Association (LGA) reveals.
The LGA's annual 'Future funding outlook report' recently published warns councils will need to make further significant savings next year, equivalent to 12 per cent of their total budgets.
Using the most recent Office for Budget Responsibility forecasts, LGA analysis predicts councils will see funding for local services reduced by a further 11 per cent in 2017/18 and 4 per cent in 2018/19 before increasing by 7 per cent in 2019/20.
It predicts this will leave councils facing a funding gap of £9.5 billion by the end of the decade.
This will be caused by a combination of reduced government funding and rising demand being placed on adult social care services by our ageing population and will add pressure on vital services like buses, fixing the roads, leisure centres and libraries.
Spending on social care and collecting waste will continue to absorb a rising proportion of council resources. Funding for other services will drop by 35 per cent in cash terms by the end of the decade, from £26.6 billion in 2010/11 to £17.2 billion in 2019/20.
The LGA said the financial challenge facing councils illustrates the urgent need for radical reform of the way public services are paid for and delivered.
Next week the LGA will launch a separate report at its Annual Conference setting out detailed Spending Review proposals for the Government to ensure local services survive the next few years.
LGA Chair Cllr David Sparks said:
"Core local government funding has been protected from further in-year cuts in the Budget but it is clear the Spending Review in the autumn will see councils continue to face challenging funding reductions and spending pressures over the next few years.
"Councils have already made £20 billion in savings since 2010 following reductions in government funding of 40 per cent and have worked hard to shield residents from the impact of funding cuts.
"There are no efficiencies left to be made for many councils while many now warn efficiencies alone will not be enough to cope with further funding cuts. Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels.
"If our public services are to survive the next years, we urgently need a radical shift in how public money is raised and spent, combined with proper devolution of decision-making over transport, housing, skills and social care to local areas.
"Fairer funding for local services, and the freedom to pay for them, will allow councils to tackle the big issues facing their residents and protect services which bind our communities together and protect our most vulnerable."
- Councils have to find savings of £2.5 billion before April after receiving 8.5 per cent less funding from government to run services in 2015/16. However, core local government funding has been protected from further in-year cuts in next month's Budget, the Government has confirmed.
- Local authorities have seen their public health budgets cut by £200 million in 2015/16 following a reduction in the Department of Health's "non-NHS" budget announced last month. This represents a 7.4 per cent reduction to the £2.7 billion annual public health budget devolved to councils.
- The LGA's interim Future Funding Outlook report is based on the most recent public spending forecasts of the Office for Budget Responsibility, contained within the March 2015 edition of the 'Economic and Fiscal Outlook'. It will be updated after the Government outlines its longer-term spending plans in the Budget and Spending Review. The report is available on request.
It also reveals that:
- The funding gap for councils in England between March 2014 and the end of 2015/16 will be £6 billion. The gap is the disparity between the total money councils will have next year (£50.3 billion) and the amount needed to maintain 2014/15 levels of service.
- Total council funding will fall by £7.6 billion between 2010/11 and 2018/19 before rising by £1.6 billion in 2019/20.
- Council tax will provide more than half of all council funding by the end of the decade (53 per cent – up from 42 per cent in 2010/11) with the proportion of income coming from centralised grants falling (9 per cent – down from 39 per cent in 2010/11).
- Three in five councils expected that they would not be able to make ends meet through efficiency savings alone by 2015/16, an LGA survey found.
- The escalating cost of caring for the elderly means councils will have to divert £1.1 billion from services like fixing potholes and running libraries and museums in 2015/16, LGA analysis revealed.
- For every £1 of council tax collected by councils in 2019/20, 60p will be spent on caring for the elderly, vulnerable adults, and vulnerable children. This is up from 41p in 2010/11.
- The LGA has launched a Future Funding interactive tool tracking the changes in spending between 2010/11 and 2013/14 on the services councils provide on a daily basis. Findings include:
- Spending on sports and leisure services decreased by 15 per cent
- Spending on road repairs decreased by 17 per cent
- Spending on parks decreased by 10 per cent
- Spending on care for vulnerable working age adults and children and families services both increased by 1 per cent.
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