09 April 2004
Council leaders are to deliver a stark warning to ministers that key public services will suffer unless they are given significant new resources in the forthcoming Spending Review, Public Finance has learned.
A draft submission, prepared by the Local Government Association and obtained by PF, will make painful reading for the government when it is submitted to the SR 2004 steering group in the coming weeks.
It will tell the Treasury that a host of existing financial pressures, combined with a long list of new statutory responsibilities expected during the 2005–2008 spending round, will place even greater strain on local authority budgets already under pressure.
Town hall leaders will tell ministers that if they do not address these shortfalls, they risk a rerun of this year's damaging council tax furore. 'It is important that government recognises that, even with the increased drive for efficiency, the ability of local authorities to contain council tax [rises] to single figures in 2005/06 is questionable,' the submission warns ominously.
Gordon Brown has already set out the overall spending 'envelope' until 2008 and confirmed that it will increase by just 2.5% a year over that period. But the document claims that local government inflation is running at a minimum of 4%–6%, compared with 2.5% for the UK economy as a whole.
It is adamant, too, that efficiency savings alone are 'extremely unlikely' to generate enough money to cover these higher costs.
The LGA, whose executive was due to discuss the draft at a meeting on April 8, believes existing pressures, such as pensions, workforce reforms and social care costs will continue into the next spending round.
Forthcoming legislative changes with potentially major funding implications include reforms to children's services, the planning regime and traffic management. 'What is unacceptable is the passing of new legislation [or] new burdens without the passing of the appropriate resources to local government to implement these new duties,' the draft says.
The LGA has not yet put a figure on the extra resources it believes are necessary for 2005–2008, although it says that the reform of children's services alone could add 3% to base budgets. 'There are detailed future pressures… that will have a major impact during the SR period, which nevertheless cannot be credibly costed at this stage.'
Sarah Wood, the LGA's director of economic and environmental policy, told PF that councils were fully signed up to the drive for greater efficiency but that ministers needed to recognise the pressures they were facing. 'If we want services to improve, we've got to keep investing in them,' she added.
Council leaders will also urge the Treasury to adopt 'realistic expectations' about what Sir Peter Gershon's efficiency review, the cornerstone of July's Spending Review, can achieve. They will insist that all savings must stay with the authorities that make them.
The draft suggests aiming to establish a standard level of cost for transactional services, such as collection of council tax and payment of associated benefits. In the longer term, it proposes a review to consider reducing the number of billing authorities.
On procurement, it suggests targeting certain areas, such as office supplies, IT and agency staff, in the search for savings. Government support should also be provided to enable councils to re-engineer back-office functions.
PFapr2004
