By Richard Johnstone | 5 November 2013
The next two years will be ‘make or break’ for the viability of many councils and the government must not impose extra cuts to local authorities in next month’s Autumn Statement, the Local Government Association has said.
In a submission to the Treasury today, LGA chair Sir Merrick Cockell called on Chancellor George Osborne to provide councils with a ‘stable environment’ to allow them to plan for funding reductions still to be implemented.
He warned that if the chancellor were to make extra cuts to local government in his statement on December 4 it would put the future of some councils at risk.
Councils are currently half way through a scheduled 43% cut in funding from central government, which is the combined impact of the two Spending Reviews in this parliament.
This ‘severe squeeze’ on local funding must not be exacerbated, Cockell said. Combined with the growing demand for social care, cuts mean the amount available to deliver non-social care services is predicted to shrink by 66% by the end of the decade.
In addition, councils in many areas face not having enough money to provide legally mandated services, he warned.
‘The next two years are make or break for many councils and the chancellor has it in his power to either deliver a stable environment in which they can plan for the unprecedented challenges ahead, or he can deliver uncertainty and risk which will put even more stress on vital local services and push councils toward failure.
‘This government is testing the resilience of councils to breaking point and in many areas the cracks are starting to show. 2015/16 is shaping up as the crunch year and we expect some councils to be placed in a position where they do not have the money they need to meet their statutory obligations.’
In its submission, the LGA also called on the Treasury to reverse its plan to withhold an additional £1bn of local government funding in 2015/16, over and above the 10% cut planned that year. This additional cash is being held back to cover Whitehall financial risks and pay for policy changes which, under the ‘new burdens’ rules, should instead be paid for by central government, the group said.
Councils also called for the full localisation of growth from the local share of business rates, including from inflation, without any corresponding reduction in grant funding.
Under current arrangements, councils retain half of local business rate growth – the so-called local share. However, this does not include any business rate increases to meet inflation, which instead reverts to the Treasury.
