Autumn Statement must not cut council funding, says LGA

30 Nov 12
Forcing councils to bear the brunt of further spending cuts would be a ‘fatal error’, the Local Government Association warned today.

By Vivienne Russell | 3 December 2012

Forcing councils to bear the brunt of further spending cuts would be a ‘fatal error’, the Local Government Association warned today.

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Ahead of this week’s Autumn Statement, the LGA highlighted the number of local services, such as roads, housing and planning, that can actively promote growth. The organisation also published figures showing that funding cuts to date had already resulted in cuts of between 16% and 44% in these areas.

LGA chair Sir Merrick Cockell said: ‘It would be a fatal error to scale back local government funding to the point where councils can no long provide local businesses with the support they need to get Britain back on its feet.

‘Local government is one of the few parts of the public sector which actively promotes economic growth. It is doing that in every single local economy in a way which cannot be replicated by central government and is impossible to deliver through any other public body.’

The figures on funding cuts were included in a report prepared for the LGA by local government expert Tony Travers. This showed that councils’ funding has fallen by 15% in real terms since 2009/10, while central government spending has risen.

The LGA wants Whitehall to examine its own budgets and begin an ‘honest debate’ on whether some of that money could be used more effectively at local level. Lord Heseltine’s call for greater devolution of power and resources to councils and their partners, included in his review of growth policy, should also be implemented.

Cockell added that, even before the last Spending Review, local government was the most efficient part of the public sector. ‘Since then, councils have been driven to even greater efficiencies, a process which has included downsizing the workforce by 230,000 staff and trimming £1.4bn from the annual wage bill.

‘None of this has been easy. And it will be impossible to repeat without putting in jeopardy some of the poplar services which residents currently expect their council to provide.’

Meanwhile, Ernst & Young’s Item Club is calling on the chancellor to prioritise capital spending in the Autumn Statement. A £14bn investment in ‘shovel-ready’ projects would add 0.5% a year to gross domestic product, the analysts said today.

Andrew Goodwin, senior economic advisor to the Item Club, said: ‘The key to this policy is in finding projects for which all of the planning and logistics have already been completed, and where all that is missing is the funding to put the shovel in the ground. This could include numerous transport projects, in particular the roads, and also essential repair and maintenance work on our hospitals, schools and other public buildings.’

The Item Club also noted that austerity could persist into 2018 if the chancellor remains determined not to breach his fiscal mandate.

‘This would effectively commit the next government to three years of spending restraint and would lengthen the austerity programme to eight years. Given the fragility of the recovery, this would appear to be preferable to any further tightening of policy in the short-term,’ said Goodwin.


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