By Lucy
Phillips
10 December 2010
The severity of local government cuts announced in the
Comprehensive Spending Review came as a shock to half of council finance
directors, while almost all have denounced the front-loading, a survey shows.
Think-tank Localis questioned more than a quarter of all
council finance directors in England for the survey. It found that some 50% of the
91 respondents said the cuts in the October CSR were worse than they had
expected while 80% believed the first year budget reductions were too steep. No
finance director said the CSR announcement had been better than anticipated.
Local government faces a 26% real terms reduction in funding
by 2014/15 as a result of measures announced by Chancellor George Osborne. The
cuts are considerably front-loaded with a reduction of about 11% expected in
the first year.
Almost three-quarters of councils now believe they will need
to make compulsory redundancies, with more than a third of upper-tier authorities
expecting to slash their workforce by more than 20% by 2015/16.
In many cases this will be in addition to merging services
with other councils or outsourcing them to the private or voluntary sector or
community organisations.
Despite an additional £2bn of funding that was allocated to
adult social care in the CSR, finance directors at upper-tier councils said
this was the service likely to be hit most by the cuts.
Respondents also expressed frustration at the lack of clarity
in Osborne’s announcement. One finance director was taken aback by ‘the lack of
policy substance’ while another characterised the CSR as ‘smoke and mirrors’
for local government.
There was support among councils for the government’s shift
towards removing ring-fenced grants but this was tempered by disappointment at
the scope of the community budget pilots outlined in the CSR.
Community budgets, which pool departmental budgets at a local
level, are to be set up in 16 areas initially and rolled out to all areas by
2013/14. Finance directors said the pilot scheme did not go far enough in
giving councils greater freedoms to tackle social issues in radically new ways.
Localis chief executive Alex Thomson said: ‘Councils have to
deliver better services for less money, and a salami-slicing, business as usual,
approach will not suffice. Councils must think radically about how they support
and empower their residents and introduce new service delivery models, with
further support from government over initiatives such as community budgets.’
