By Richard Johnstone | 16 April 2013
Local government spending on leisure and education services could be reduced to zero as a result of Whitehall cuts, a report by the New Local Government Network has warned today.
In an examination of the impact of funding reductions to town halls, which the government has now confirmed will last until 2018, the think-tank said council tax rises and further redundancies were ‘inevitable’ in coming years.
The findings came from a budget-setting exercise NLGN conducted with more than 50 senior council officials from across the country. Officers were challenged to set the budget for a fictional authority, AnyBorough, based on real council spending data and economic modelling, including a likely real-terms funding reduction of 50% between 2011/12 and 2017/18.
In the ‘war gaming’ scenario, the officers concluded that authorities would be ‘under huge pressure’ to maintain the quality of social care for the elderly and adults with learning disabilities. Rising demand and falling budgets would mean that even radical reforms, such as pooling health spending with the NHS, would not be enough to meet rising care costs as the ‘baby-boomer’ generation retired. Some councils might even start paying ordinary householders to look after elderly neighbours.
The need to pay for social care meant Newcastle City Council’s decision to cut its entire culture budget would be the first of many, as councils pulled out from significant service areas such as leisure, officers concluded.
Local government funding for schools could also be hard hit, as town halls were likely to entirely transfer the burden to Whitehall-funded academy schools. This could then put additional pressures on funding for childcare, school transport and free school meals.
The officers also concluded that a range of council tax rises, redundancies and efficiency savings though shared services would not be enough to fill the budget gap emerging by 2017/18.
Councils would therefore need to ‘speed up the pace’ of innovation by investing in early intervention services focused on prevention and in local economic growth.
Whitehall would need to help councils balance their budgets over the coming years by expanding the use of Community Budget spending plans, the report added. This would allow money currently allocated to the NHS, police and skills to be merged with local government spending, so it could be better focused on local priorities.
NLGN director Simon Parker said cuts to local government funding were leading to ‘a historical shift in the range of services that councils will be able to provide’.
He added: ‘There is no getting away from the reality of these cuts – indeed, many parts of the country are facing a tougher future than AnyBorough. But with national support and local innovation, local councils can mitigate the impact of plummeting budgets through imaginative new solutions. Ministers and councillors must act now.’
Andrew Ford, head of local government at PricewaterhouseCoopers, which supported the war-gaming exercise, said the report highlighted the practical implications of managing sustained austerity for councils and the communities they served.
‘The challenge is no longer just an efficiency one about how councils operate, but instead a much more profound one about what they exist to do and what value they provide to local communities. Councils can only grasp the opportunities if they move quickly and if central government helps them to do so.’
