By Richard Johnstone | 4 August 2014
Council spending will have fallen by nearly 30% by the end of the current parliament as a result of government funding reductions, an analysis of expenditure by CIPFA has found.
The data, compiled by CIPFA and the Department for Communities and Local Government as part of the 2014/15 Revenue Account Budget Estimates return, means council spending will have fallen back to the level of 2005/06 in cash terms.
The cash reduction in per capita spending between 2009/10 – the last year of the previous Parliament – and 2014/15 will be 14.5%. However, this rises to 29.1% when adjusted to take account of inflation over the period.
Publishing the figures, CIPFA chief executive Rob Whiteman said the sharp downward trajectory of local authority spending in both cash and real terms illustrated the significant financial challenge faced by councils.
‘Many authorities have managed this reduction well and continue to live within their means, but we are now starting to see some councils face real and immediate financial pressures,’ he added.
‘If we are to prevent the financial failure of vulnerable local authorities, we must recognise that some councils have been hit harder than others and will need more support. But also that there is a real and pressing need for fundamental reform of the financing of local government if we are to see it not just survive but succeed and thrive over the coming years.’
The figures also showed the cuts being implemented in the 2014/15 financial year.
According to the analysis, local authority spending will fall in all regions of England compared to 2013/14, with authorities in the east Midlands (down 4.1%) and the north east (-5.0%) implementing the biggest budget reductions.
The analysis also calculated the reduction in spending across a host of different service areas in the year. The biggest fall in budgeted spend is housing, where councils have reduced funding by 7.8%, followed closely by education, although much of the 7.6% cut to spending is likely due to schools converting to academies, removing their funding from local authority control. Other areas seeing significant reductions are include culture services, down 6.3%, and highways and transport, reduced by 6.2%.
By contrast, funding for children's social care will increase by 16.4% over the year, while public health will rise by 5.5%.
Communities minister Brandon Lewis said that this year, local authorities were expected to spend some £114bn, so it was vital councils continued to play their part in reducing the deficit.
'The local government funding settlement is fair to all parts of the country – rural or urban, district or county, north or south and average council spending power is still more than £2,000 per household,' he added.
'Research actually shows people are happier than ever with services delivered by their local authorities and recent polls have found the majority of the public have not noticed any difference to council services following budget reductions.'