Chancellor risking 'fatal error' on growth, warns LGA

LGA media release 3 December 2012

The Chancellor risks making the ‘fatal error' of undermining the potential of local economies to drive economic growth if councils are made to bear the brunt of further cuts to public spending, town hall leaders warn today.

The warning comes as new figures reveal that cuts to the funding councils receive from Government have already forced a reduction of between 16 and 44 per cent in councils' spending on pro-growth services such as roads and transport, culture, housing and planning and development. These cuts sit alongside smaller, but still significant, reductions in the amount of money available for core services such as adult social care and child protection.

The figures, contained in an independent report for the Local Government Association (LGA) by Professor Tony Travers published today, also show that since 2009/10, funding for local government has fallen by 15 per cent in real terms at the same time central government spending has risen. This is down to the fact that central spending on health, schools, international development and social security has been protected from spending cuts.

The LGA, which represents more than 370 local authorities in England and Wales, says ongoing cuts to local government funding beyond the current spending review period risk handicapping the growth promoting ability of one of the only parts of the public sector which plays an active role in delivering economic prosperity.

The LGA is calling on the Government to examine Whitehall's soaring budgets and for an honest debate on whether some of that money could be put to more effective use in supporting the locally-based growth promoting projects which will help shore-up the economy, increase tax revenue and help Britain pay down its deficit.

Local government leaders are also calling on the Chancellor to back proposals contained in Lord Heseltine's 'No stone unturned' report for greater devolution of power and resources to local areas to help councils and their partners in business promote local economies and drive national growth.

Sir Merrick Cockell, Chairman of the Local Government Association, said:

"It would be a fatal error to scale back local government funding to the point where councils can no longer provide local businesses with the support they need to get Britain back on its feet.

"Local government is one of the few parts of the public sector which actively promotes economic growth. It is doing that in every single local economy in a way which cannot be replicated by central government and is impossible to deliver through any other public body. This point was recognised by Lord Heseltine in his recent report which rightly called for the greater devolution of power and resources to local areas. This is a policy that, if adopted, will deliver. But it requires courage, vision and political conviction. From that point of view, the Government needs to be a bit more Tarzan and a lot less Jane.

"Local government was already the most efficient part of the public sector before the last spending review set out a 28 per cent cut to the funding councils receive from central government. Since then, councils have been driven to even greater efficiencies, a process which has included downsizing the workforce by 230,000 staff and trimming £1.4 billion from the annual wage bill. None of this has been easy. And it will be impossible to repeat without putting in jeopardy some of the popular services which residents currently expect their council to provide.

"A recent independent report from the Audit Commission showed that councils have been able to protect spending on social care for children and the elderly, despite cuts to their budgets. But even these areas are now facing reductions. It is an important reminder that debates on public spending are not about the respective balance sheets of public institutions but the provision of vital services on which people rely."

ends

Author: LGA Media Office
Contact: Dale Atkinson, Local Government Association Media team, Telephone: 020 7664 3333

Notes to editors

A full copy of the report can be found below:

Tony Travers' report: 'Local government's role in promoting economic growth' (PDF, 39 pages, 680KB)


3 December 2012

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