According to the Local Government Association’s (LGA) annual ‘Future funding outlook report’, councils in England could lose as much as £3.3bn in central government funding in 2016/17; a sum equivalent to 12% of total budgets. The LGA figures, calculated using Office for Budget Responsibility forecasts, predict that budgets will subsequently be slashed by a further 11% in 2017/18 and another 4% in 2018/19, with an increase in funding not predicted until 2019/20. The question is, will councils be forced to sacrifice services to cope with the cuts?
How much can be cut?
Although many councils have dealt with budget constraints admirably, either by boosting and allocating reserves or making efficiency savings, we will invariably reach a point where this is no longer possible.
A survey by CIPFA found that nearly all of UK councils’ cash reserves have already been allocated to specific investments or to the management of risks. Outgoing LGA chief executive Carolyn Downs warns that increasingly risky integration deals are now in danger of compromising services.
LGA Chair, Cllr David Sparks, echoed Downs' points, warning: "There are no efficiencies left to be made for many councils... Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels.”
Can power devolution help?
While many councils will be forced to continue sharing, integrating and cutting services, we may also see a continued push for further devolved powers, which would give local authorities the flexibility to gear their finances towards protecting services most needed by their constituents.
A roundtable event hosted by Grant Thornton polled senior finance officers from 36 local authorities, and concluded that the current funding system is “inconsistent, unstable and uncertain”, and that further devolution of finance is required to enable councils to create their own financial stability.
Incoming LGA president Bob Kerslake sounded a similar rallying cry in an article penned for The Guardian, in which he called for more power, and more responsibility, for local government in dealing with financial strife.
While the battle is being fought, however, councils will need to make every penny count. If you need help recouping unpaid debts in a timely and sensitive manner, contact a Dukes Bailiffs advisor today.