Local government has been accused in the past of crying wolf over spending cuts. But, following this week’s Spending Review, it seems that the wolf really is at the doors of the town hall
George Osborne’s Spending Review announcement will have come as little shock to those in local government and, indeed, the wider public sector. The headline figures were largely anticipated, as the Chancellor seeks an additional £11.5bn in savings. These latest cuts are on top of austerity measures introduced in the 2010 Spending Review, which saw the largest reductions in public spending since the 1920s, a significant proportion of which targeted local government.
In this week’s announcement, the Chancellor confirmed a further 10% cut to local government funding, although he suggested that this could be reduced through access to grants and other initiatives. He recognised that this would represent a 33% reduction in real terms to council budgets since 2010.
The Spending Review serves as an opportune moment for a reappraisal of local government. It's important to remind ourselves of where the sector was three years ago, and the ingenuity shown since the first round of grant reductions were introduced.
One thing that stood out in Osborne’s speech was the specific credit he gave to Communities Secretary Eric Pickles and Local Government Association chair Sir Merrick Cockell. He seemingly acknowledged local government’s capacity to deliver the scale of savings achieved so far. No other spending department received such positive affirmation.
The Chancellor's actions imply that local government leaders are more capable of meeting the national challenge than other parts of the public sector. Local government's uniqueness lies in the rich mix of backgrounds, cultures and perspectives that make up a very diverse sector. This broad tapestry of member and officer knowledge has helped drive innovative and creative thinking, particularly when facing difficult budgeting decisions.
Over the past three years, local government members and senior officers have tightened their organisational belts and most have shown they are able to deliver significant change. The government is placing continued reliance on their resourcefulness in order to help meet the fiscal shortfalls facing the broader public sector.
While councils will undoubtedly feel the pressure of the announced reductions in funding, many will be capable of avoiding a tipping point, based on prudent survival techniques and an ability to deploy growth opportunities realised over the past few years. Although, for some, the jury is still out on whether they'll be able to keep their heads above water for much longer without running down their reserves.
When the 2010 Spending Review cuts were first announced, the response given to local government when it raised concerns was that it was 'crying wolf' based on a perceived surplus of reserves. Now, for many councils, the proverbial wolf is fast approaching the front door.
Paul Dossett is head of local government at Grant Thornton UK
