The Comprehensive Spending Review is the toughest settlement the public sector has had to face in recent times. A reduction in funding of 27% over four years will represent a significant challenge for local authorities in particular.
However, what we have to date is only the announcement of aggregates. The real impact on individual authorities will only become apparent when the government announces the allocations to each council in the local authority finance settlement next month.
Wrong decisions on grant distribution could throw local authorities into serious financial hardship with the ultimate financial survival of some coming into question. It is absolutely essential that in the distribution of this reducing level of support the social demographic and financial characteristics of local authorities are taken fully into account.
It does seem that directing increasingly scarce taxpayers money to those councils that are still in the happy situation of being cash rich would not be the most rational thing to do.
A key aspect of the whole picture will be government decisions about the grant floor. This protects those authorities that have lost out in distributional changes from the worst effects of those changes by limiting the impact over a period of years.
The retention of a reasonable level of floor is essential to enable those authorities with a reducing underlying position to maintain the services needed by vulnerable communities and, indeed, to be able to deliver work on the government's objectives so far as council tax is concerned.
There can be no doubt that a significant reduction in the level of the floor in 2011/2012 will send some local authorities into a potentially perilous position.
It is critically important that the government take this into account in making decisions on their allocations to local authorities.
Stephen Fitzgerald is the director of finance at the London Borough of Hounslow
