16 January 2009
By Alex Klaushofer
Councils' capital projects are being jeopardised by the recession, a survey of English local authority chief executives has shown.
The survey, carried out by the Local Government Association and the Society of Local Authority Chief Executives and Senior Managers, revealed that half of existing public sector schemes had been adversely affected by the economic downturn, while almost 80% of privately financed project were in doubt.
Falling land values were cited as the most common factor affecting public sector schemes, while a lack of finance and confidence among developers were putting private sector projects at risk, the study found.
An LGA spokesman said the downturn was affecting schemes across the board, including those financed by a mixture of public and private funding.
'Public money is still there, but the real problem is that private money isn't there any more,' he said. 'While councils are still able to put up a bit of cash, private sector involvement is much less readily available than it was 6—12 months ago.'
The majority of chief executives questioned — 82% — said the downturn had not had a negative impact on community cohesion so far. But almost half expected that rising unemployment would lead to a deterioration in community relations in the next year.
The Institute for Community Cohesion's head of policy, Nick Johnson said: 'They are right to be fearful, but I don't think it's necessarily inevitable that there will be a negative impact.
'The crucial thing is how local authorities adapt to providing services in this economic climate.' Last weekend Communities and Local Government Secretary Hazel Blears told the Sunday Times that the recession could 'go either way', making communities either more fragmented or stronger.
Nine out of ten councils said they were experiencing or expecting a greater demand on services, with 54% reporting more call on welfare and debt advice services, and 45% more housing benefit applications.
Almost 40% — 155 — of the 388 local authority chief executives contacted responded to the survey in November.
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