40 per cent funding reduction will devastate local services and communities, councils warn

Ahead of the Spending Review, non-protected government departments have been ordered to produce savings plans worth 25 and 40 per cent of their budgets, which will set out spending plans over the next four years.

Analysis lead by the LGA, represented data from 370 councils in England and Wales and reveals a 40 per cent real terms reduction to core central government funding would be worth £8.4 billion. When the same reduction was applied to separate local government grants, a further £2.1 billion is lost from council budgets.

The survey’s results found that the local government would lose 64 per cent of its grant funding between 2010 and 2020.

In the Spending Review submission to the Treasury, the LGA predicted councils would face almost £10 billion in separate cost pressures such as government policies, inflation and demand by 2020, before the savings scheme was implemented.

Combined with a 40 per cent reduction to funding from central government, councils will be left to face £20 billion in funding cuts and increased cost pressures by end of the decade, likely to devastate local services and communities.

Annual council spending on individual services last year included £3.3. billion on bin collection and recycling; £2 billion on arts and leisure; £1.3 billion on road maintenance; £1.7 billion on subsided bus services and free travel for elderly and disabled; £717 million on street cleaning; £690 million on parks maintenance; £530 million on street lighting and £480 million on trading standards, noise and environmental health.

According to the LGA, even if councils stopped providing all of the aforementioned vital services, it would still not be enough to plug the potential £20 billion hole in their finances by 2020.

Lord Porter, LGA Chairman, said: “Councils are under no illusions about the challenge that lies ahead. We know we face almost £10 billion in cost pressures by 2020 even before the prospect of further challenging funding reductions over the next four years. 

"What is clear is that another 40 per cent real terms reduction to local government grant funding on top of these cannot be an option on 25 November.

"Providing councils with fairer funding is the only way to avoid the unintended consequence of other parts of the public sector, such as the NHS, being left to pick up the financial pieces.

"It would be our residents who would suffer as councils are no longer able to deliver some of their statutory duties, like street cleaning and providing the free bus travel that is a lifeline to our elderly and disabled.

"These are the difficult decisions councils will be forced to face. Many of the things people take for granted, like clean and well-lit streets, maintained parks and access to leisure centres, will become a thing of the past as a result."

Read more

Event Diary

Solutions for Councils and Landlords