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Councils face 15% funding gap, says LGA

By Richard Johnstone in Manchester | 2 July 2013

Tens of councils face a financial shortfall of more than 15% in 2015/16 following Chancellor George Osborne’s Spending Review, the Local Government Association warned today.

In its analysis of the impact of the spending round on town halls, the LGA said it estimated that 86 town halls faced this funding gap. This is more than seven times what Chancellor George Osborne had said the reduction in council funding would be in his Spending Review speech on June 26. 

The chancellor announced that the local government resource budget would be cut by 10% in 2015/16, but insisted that other changes meant the actual reduction to ‘local government spending’ would be only around 2%.

However, LGA chair Sir Merrick Cockell said that for a host of authorities – from different regions, tiers and political control – their estimated income would account for less than 85% of projected spend in 2015/16.

Revealing the figures at his speech to the LGA conference today, Cockell said this showed that the ‘current financial position of many councils is unsustainable in the medium to long term’.

He added: ‘Put simply, these councils will be short by at least 15p for every £1 they are currently committed to spend. These are stark figures and show the scale of what we are facing.’

Vital services were being damaged ‘because councils do not have a seat at the table to negotiate a fair deal for their communities’, he added.

However he highlighted the agreement in the spending round to better integrate health and social care funding. This showed the ‘positive’ results that come from councils being involved in spending decisions, he said.

The LGA had called for money from the NHS to be shared with councils, and Osborne announced plans for joint commissioning of more than £3bn.

‘This is a major breakthrough – it could be a game-changer but we need to go further, and we need to go faster,’ Cockell added.

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