By David Williams
11 August 2009
Town halls have reported a £4bn financial hole caused by an ongoing ‘perfect storm’ of falling revenues and increasing demand for services.
Figures published today by the Local Government Association show that councils in England have been losing out on almost £11m every day this year compared with 2007/08.
The survey also suggests that low interest rates and the property market slump are hitting local authority finances.
LGA vice-chair Sir Jeremy Beecham said: ‘Town halls are being hit by a perfect storm.
‘Councils are feeling the effect of recession in exactly the same way as hard pressed homeowners and families.
‘Low interest rates mean councils are much less able to rely on their savings, plummeting house and land prices have hit hard and income from leisure centres and a range of other services has fallen.’
He pointed to innovative measures councils are taking to help their communities through the recession. This included Essex County Council setting aside £50m for loans to small and medium-sized businesses.
Nearly half of all local authorities have set up or supported credit unions, and a quarter have allowed businesses to defer paying business rates.
The LGA is working to increase the number of council apprenticeships by 7,500 to help mitigate the effect of the recession on young people.
Nevertheless, Beecham said the organisation ‘fully expects’ town halls to keep cutting jobs over and above the 7,000 redundancies already made in the past six months.
The LGA data shows income from property sales has fallen £2.7bn since 2007/08, while persistently low interest rates have led to a drop of £1.3bn in the amount generated by cash deposits.
It is the second gloomy public sector forecast this week. An August 10 survey by the Chartered Institute of Personnel Development and KPMG found that 28% more employers are planning cut jobs rather than adding new positions.
That figure is up from 3%, reported just three months earlier.
11 August 2009
Town halls have reported a £4bn financial hole caused by an ongoing ‘perfect storm’ of falling revenues and increasing demand for services.
Figures published today by the Local Government Association show that councils in England have been losing out on almost £11m every day this year compared with 2007/08.
The survey also suggests that low interest rates and the property market slump are hitting local authority finances.
LGA vice-chair Sir Jeremy Beecham said: ‘Town halls are being hit by a perfect storm.
‘Councils are feeling the effect of recession in exactly the same way as hard pressed homeowners and families.
‘Low interest rates mean councils are much less able to rely on their savings, plummeting house and land prices have hit hard and income from leisure centres and a range of other services has fallen.’
He pointed to innovative measures councils are taking to help their communities through the recession. This included Essex County Council setting aside £50m for loans to small and medium-sized businesses.
Nearly half of all local authorities have set up or supported credit unions, and a quarter have allowed businesses to defer paying business rates.
The LGA is working to increase the number of council apprenticeships by 7,500 to help mitigate the effect of the recession on young people.
Nevertheless, Beecham said the organisation ‘fully expects’ town halls to keep cutting jobs over and above the 7,000 redundancies already made in the past six months.
The LGA data shows income from property sales has fallen £2.7bn since 2007/08, while persistently low interest rates have led to a drop of £1.3bn in the amount generated by cash deposits.
It is the second gloomy public sector forecast this week. An August 10 survey by the Chartered Institute of Personnel Development and KPMG found that 28% more employers are planning cut jobs rather than adding new positions.
That figure is up from 3%, reported just three months earlier.
