FDs fear for councils in medium term
By Richard Johnstone | 23 February 2012
Finance directors’ fears are mounting over how their councils will be able to run services effectively and balance their books in the medium term, a CIPFA survey reveals.
The poll of 134
local authorities, published today, found that more than half (55%) are
planning to cut spending by at least 5% in the next financial year.
The survey also
highlights growing concerns about authorities’ ability to meet their statutory
obligations in the next few years. The chief finance officers are more anxious
about their councils’ ability to provide services and maintain a sound
financial position in the medium term than they were 12 months ago.
Around 70% of
respondents said they are either ‘slightly’ or ‘much’ less confident about the
position their councils will be in to provide services in 2013/14 than they
were this time last year.
Two-thirds are
also ‘slightly’ or ‘much’ less confident about what the councils’ financial
position will be in 2013/14 than they were 12 months ago.
CIPFA chief
executive Steve Freer said chief finance officers were ‘relatively confident’
about managing immediate challenges.
But he added: ‘They
are much more anxious about the medium-term position (2013/14). As well as
focusing on delivery of 2012/13 budgets, it will therefore be essential to
devote yet more time and energy to medium-term financial and service planning
to develop the strategies for managing through the very difficult challenges
which still lie ahead.’
Next year will be
the second year of the government’s public spending cuts programme, which have
hit councils particularly hard. In 2011/12, council spending cuts averaged out
at 9.4%.
The CIPFA poll,
conducted ahead of councils’ 2012/13 budgets being approved, reveals that
public libraries, museums and other leisure services are particularly vulnerable to
cuts. More than a third of respondents say they are planning to cut these
areas by more than 5%.
Just under one-third
– 29% – plan to cut adult social services by more than 5%, with a similar
percentage also planning cuts of that magnitude to highways and transport
spending (32%), and waste and recycling services (30%).
Almost half – 45%
– will cut spending on back-office support functions such as finance, human resources
and IT by more than 5%. Almost the same amount – 42% – plan to reduce spending
on property and other assets.
The highest
number of job losses are also expected to come from the back office. Around 10%
of councils expect to cut more than 100 staff from back-office functions, and a
further 27% expect to lose more than 20 staff. Around 11% of councils also
expect to reduce non-managerial frontline staff by more than 100.
Council spending
on capital investment and economic development has been most protected from cuts,
with no reduction in spending being planned by 45% of authorities. Children’s
social care services are also being protected from cuts by 44% of authorities.
Only one-third of
councils have planned to outsource services to the voluntary sector as part of moves
to balance their 2012/13 budgets, and slightly less, 31%, expect to do so to the
private sector.
Asked what
councils will do to balance their books, 93%, said they are restructuring or
reorganising staff and services. Efficiency measures are being introduced
by 91% of respondents, and 85% are rationalising property or other assets.
Three-quarters
are increasing fees or charges, and two-thirds are planning to share services
with other public bodies.
Freer said
the survey illustrates ‘the difficult choices which councils are making about
local service priorities’.
