17 September 2010
Council leaders warned the government today that a combination of grant cuts and increasing demand for services could leave them with a funding gap of up to £20bn a year by 2014/15.
In a submission to the Treasury’s Comprehensive Spending Review, the Local Government Association argued that significant reforms to services and funding would be needed to plug the hole.
The introduction of Total Place-style local budgets could save up to £100bn over the next five years, councils said.
The LGA identified a series of factors that will put council finances under strain over the next five years. These include an ageing population coupled with a rising birth rate, which will simultaneously put pressure on social care services and schools.
The cost of children’s services will rise by £5bn over the current Parliament while social care costs could increase by a £5.6bn. The problems will intensify if inflation continues to rise, the LGA said.
The council lobby group warns that cuts will harm local economies, and calls on the government to spend more on Local Enterprise Partnerships, the replacement for regional development agencies, to help stimulate commerce and industry.
The submission points out that the only confirmed source of funding for LEPs so far, the £1bn Regional Growth Fund, ‘falls far short’ of what their predecessor bodies were allocated.
Councils are expecting government grant cuts of 20% – around £9bn a year – by 2014/15.
The LGA suggests 20 reforms that could enable councils to save money. Pooled budgets for local public services top the list. Integrated policies for health and social care, removal of all ring-fencing, and the abolition of landfill tax also feature.
LGA chair Baroness Eaton pointed out that councils had made ‘huge efficiency savings’ in recent years, and there were limited opportunities for further savings without service cuts.
She called for more financial freedom for councils. ‘Local public services like care for the elderly or youth work should not be put at risk because of Whitehall turf wars, with civil servants refusing to devolve their department’s budget because central government knows best.’
