Government cuts risk 'failing communities'

LGA media release 9 May 2013

Millions of people are living in areas where their council will have to close children's centres, libraries, museums and sports centres, as well as slash pothole fixing budgets, increase bus fares and switch off streetlights between midnight and dawn, if significant new cuts to local government funding are made in the 2015/16 public spending round.

The Local Government Association (LGA), which represents more than 370 local authorities in England and Wales, has mapped the likely impact on local services if the next spending round were to deliver a 10 per cent cut to the funding an average upper-tier council receives from central government.

The 'Anycouncil' modelling shows that residents living in a council area which sits in the mid-range in relation to current funding, levels of deprivation and outlook for economic growth should expect to see key local services dramatically reduced in 2015/16 and beyond unless local government finances are put on a sustainable footing. Millions of residents are living in areas where their council will have to consider similar measures.

The predicted impact on local services in the average upper-tier council is due to a combination of the sizable cuts to funding the Government has already implemented across the current spending period (2011/12 to 2014/15), the exhaustion of readily-obtainable improvements in efficiency and the rising demand for adult social care.

Anycouncil is already facing a 27 per cent cut in funding from central government. On top of this it has implemented a two-year council tax freeze. When combined with inflation and rising demand on services for vulnerable residents Anycouncil has had to reduce spending on non-care budgets by the equivalent of £64 million across the 2011/12 to 2014/15 spending period. A further 10 per cent cut would mean the council would have to find another £30 million in savings in 2015/16. In order to achieve that cut it would have to reduce spending on a broad combination of non-statutory services which might include children's centres, museums, libraries and sports centres, as well as reduce road maintenance budgets, increase bus fares and switch off streetlights between midnight and dawn.

Local government as a whole, which is seeing its funding from central government cut by £10 billion in real terms across the current spending period (2011/12 to 2014/15), is facing a rapidly growing financial black hole, brought about by a combination of cuts and the escalation in demand for and the cost of delivering adult social care. It is predicted that by 2019/20, unless there is major reform of local government finance, the black hole will be £16.5 billion. This figure represents the difference between projected funding and the predicted cost of providing the current level of services. Under this scenario, almost all of councils' money would have to be spent on explicit statutory responsibilities like social services, waste collection and concessionary travel, meaning that the money available for all other services, such as libraries, road maintenance and leisure facilities would have been cut by 90 per cent.

The analysis shows that the current financial position of most councils is unsustainable in the medium to long term. Council leaders are warning that unless steps are taken to fix local government's current financial instability, councils will start to fail their communities. This is because they will no longer be in a position to provide key services which are every bit as important to the public as those provided by emergency services, the NHS and schools.

The LGA is calling on the Government to take a number of steps in the 2015/16 Spending Round to ensure vital local services are not placed on the endangered list. Among the most pressing is the removal, or at the very least adjustment, of ringfencing from health and schools budgets. Local government leaders believe part of these budgets could be much more effectively spent on council services such as pre-hospital care for the elderly and infirm, or early intervention services for troubled children and their families. The LGA believes such a move would ultimately save money for other parts of the public sector by reducing demand for hospital and health services and improving educational outcomes and job prospects for young people.

Sir Merrick Cockell, Chairman of the LGA, said:

"Local government has so far borne the brunt of cuts to public spending. If the Government pursues the same policy again local services will suffer to the point where many councils start failing their communities.

"Anycouncil is an average upper-tier local authority and the measures it will have to consider if faced with a further 10 per cent cut in 2015/16 will have to be considered by many councils right across the country. If the residents of Anycouncil face the prospect of closures to children's centres and libraries, more potholes on local roads and lights out after midnight, then millions of residents are living in areas where their council will be forced to do the same.

"Councils were already the most efficient part of the public sector before the current spending round. Over the past three years they have worked tirelessly to deliver new efficiencies through measures such as sharing services, restructuring the workforce and reducing senior pay. This work can only go so far in reducing the impact of funding cuts on local services. In many council areas we have now reached a stage where noticeable cuts to local services are a mathematical certainty unless the next spending round places local government finance on a sustainable footing.

"The Government has to take steps which deliver long-term efficiency across the whole public sector and encourage government agencies in local areas to work together to find ways of improving services and making savings. In the short term this has to involve the removal, or at the very least adjustment, of ring-fencing from health and schools budgets to ensure services like social care and early intervention for troubled children are properly funded. This is the most effective way of reducing the demand for other, more costly public services elsewhere. 

"Ultimately the only way of maintaining public services in the face of proposed long-term cuts is a radical redesign of the way public services are provided and paid for. This has to be based on the idea of allowing local areas to design services around the needs of people and communities. Our research shows that the Community Budgets approach would save billions of pounds a year while improving the quality of services, but this potential will only be met if the whole public sector embraces the idea."

Key steps the Government must take in the 2015/16 Spending Round include:

1. Either removing or adjusting the ringfence currently around the health budget and using some of the money to fund desperately overstretched adult social care services. This will help local government to take pressure off hospitals and the NHS by funding services which improve peoples' health and help the elderly and infirm to stay independent. Local government's new public health roll must also continue to be properly funded.
2. Reversing recent changes to schools' funding which prevent schools from working with councils and other local agencies to use the Dedicated Schools Grant to support early intervention and help reduce demand on public services, as well as improve educational and other outcomes for children and young people.
3. Updating the financing regime for local government to reflect the importance of local services. This should include an increase in the local share of business rates, while retaining equalisation, plus an acknowledgement of the legitimacy of tax and income streams set by democratically-accountable local representatives.
4. Helping councils to build new homes, for example, by removing borrowing restrictions from the Housing Revenue Account
5. The creation of an ambitious single pot for local growth as proposed by Lord Heseltine.
6. Facilitating a joint place-based approach to public sector transformation through Community Budgets.

Author: LGA Media Office
Contact: LGA Media Office, Telephone: 0207 664 3333

ends

Notes to editors:

A copy of the LGA's Anycouncil analysis, along with a copy of the overview summary of the LGA's spending round submission can be found at the link below.

LGA Spending Round submission

Anycouncil – key facts

  • Anycouncil is an upper-tier local authority, which means it is responsible for the majority of local services in its area. These include, among other things, adults and children's social care, waste collection and disposal, social housing, road maintenance and libraries provision. In all, Anycouncil delivers upwards of 700 different local services.  
  • The funding Anycouncil receives from central government is being cut by 27 per cent across the current spending period (2011/12 to 2014/15).
  • The 27 per cent funding cut, a two-year council tax freeze, inflation and rising demand on services for vulnerable residents means that Anycouncil has to reduce spending on non-care budgets by the equivalent of £64 million by the end of 2014/15.
  • A reduction in some services has been noticeable, along with an increase in some charges and a narrowing eligibility criteria for certain kinds of support, the cuts have mostly been achieved by measures such as asset sharing, consolidating back office services, reducing the size of the workforce, freezing employee pay, cutting the chief executive's salary, reducing the number of middle managers, improving procurement, improving service delivery and reducing support for cultural and sporting events.
  • Due to the aging population in Anycouncil, the demand for and cost of providing adult social care is climbing rapidly. It is predicted that if current funding and cost trends continue the proportion of the total council budget spent on adult social care will rise from 25 per cent in 2011/12 to 39 per cent in 2019/20. With the cost of other core statutory services, such as children's social care and waste management, also rising over that time the proportion of Anycouncil's budget available for all other services falls from 55 per cent of the total budget in 2011/12 to 33 per cent of the total budget in 2019/20.
  • If faced with a further 10 per cent cut in the money it receives from central government in the 2015/16, it will likely have to find further reductions in spending of somewhere in the region of £30 million. The table below shows the potential measures Anycouncil would need to take to help it achieve that saving:
 

 Service area/income stream

Measure

Saving £m

 Sports and leisure

Reduce expenditure to zero

7.9

 Local council tax support scheme

Reduce funding by 20%

5.4

 Children's centres

Close five centres

3.5

 Highways and roads maintenance

Reduce expenditure by 15%

1.6

 Single Person Discount*

Remove for non-pensioner households

2.2

 Museums and galleries

Close all seven museums/galleries

2.1

 Voluntary Sector

Reduce expenditure to zero

1.7

 Council tax*

Increase by a further 1%

1.6

 Local bus subsidies

Reduce expenditure to zero

1.1

 Libraries

Close six libraries

1.0

 Street lighting

Turn off 25,000 lights (50%) midnight-5.00 am

0.4

 Planning service

Reduce expenditure by a further 20%

0.6

 Non-statutory schools transport

Remove for 1,000 pupils

0.4

 *Requires central government policy change

 

 

 

 


12 June 2013

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