Welsh town hall budgets set to shrink for ten years, says IFS

5 Oct 12
Welsh councils will be spending less per person by the end of the decade than they do now, the Institute for Fiscal Studies has predicted.

By Vivienne Russell | 5 October 2012

Welsh councils will be spending less per person by the end of the decade than they do now, the Institute for Fiscal Studies has predicted.

An IFS analysis of local government spending in Wales, published today, revealed that per capita spending by Welsh unitary authorities has been cut by 8% in real terms since 2009/10. The institute warned that, despite this ‘significant’ cut, the bulk of spending cuts implied by the government’s plans were yet to come.

David Phillips, senior research economist at the IFS, said: ‘Even if the UK public finances are restored to health by 2016/17, and public spending then grows in line with the Office for Budget Responsibility’s forecast of long-term economic growth, Welsh unitary authorities would likely be spending less per person at the end of this decade than they do now and that is after three years of quite deep spending cuts.’

He added that the spending squeeze was taking place against a backdrop of rising demand for services, such as elderly care, while further cuts beyond 2016/17 were also a ‘real possibility’.

The IFS report, Local government expenditure in Wales: recent trends and future pressures, also highlighted a significant variation in the level of cuts between authorities over the past three years. These largely reflected differences in the Welsh Government’s reductions to grant allocations.

But the think-tank added that the most deprived areas had not been disproportionately affected, unlike in England.

‘For instance, the real-terms reduction in spending per person by unitary authorities in West Wales and the Valleys have averaged 7.8%, whilst in the generally more affluent East Wales region, spending cuts by unitary authorities have averaged 8.4%,’ the IFS said.

There was also significant variation between service areas, with spending on regulation and safety services being slashed by 24.6% per person since 2009/10, followed by planning and development (22.9%) and housing (20.6%).

Spending on social services had been relatively well protected, falling by 2.78% over three years, as had spending on environmental and refuse services (4.8%) and education (7.3%).

Aaron Shotton, deputy leader of the Welsh Local Government Association, said the IFS’s findings were a ‘wake-up call’ on the severity of the long-term financial crisis in public spending.

He said: ‘Such large cuts, in addition to those already made, will be difficult to achieve without affecting the range and the quality of services currently provided to local residents. Such a bleak financial climate means that councils may be forced to cut, or scale back spending on a vast array of services that they have traditionally delivered.

‘Local government in Wales faces a hugely challenging fiscal situation for many years to come. We will need to innovate, and we will need to mitigate the negative effects of spending cuts and welfare reforms if we are to protect our local communities.’

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