CIPFA CFO survey highlights ‘perfect storm’ of council pressures

16 Dec 14

Local authority chief finance officers are becoming less confident about the ability of their organisations to continue providing services amid government funding cuts, a CIPFA poll has revealed.

The institute’s annual CFO survey found that more than two-fifths (41%) of the officers polled across 229 authorities reported they were less confident about the ability of their authority to deliver services in the next financial year. This is up from 27% of CFOs who said this in 2013/14 and 20% in 2012/13.

Publishing the figures, CIPFA said the lack of confidence was the result of a ‘perfect storm’ of demographic pressures that were increasing service demand alongside cuts to central government grant and erosion of the local tax base.
Ahead of the local government finance settlement, which is expected tomorrow, the institute highlighted that government funding to local authorities will have been cut by 37% in real terms between 2010/11 and 2015/16. This equates to 25% of local authorities’ total income when taking into account council tax receipts.

Areas of concern for town halls also include uncertainty over costs from implementing the Care Actand the differing geographic impact of the government’s New Homes Bonus.

In addition, the current lack of transparency over whether the current council tax freeze grant would continue beyond 2016 mean some authorities fear a ‘fiscal cliff’ if it is removed.

CIPFA called for greater clarity and openness from government about the effects of funding reductions.

Chief executive Rob Whiteman said: ‘As we’ve talked to local authorities we’ve seen that the mounting pressures on services, combined with ongoing cuts, are pushing those who manage the public money to make stark choices over services.

‘We need the government to acknowledge this and end short-term, stop-gap initiatives that harm the sustainability of local authority finances and act against the long-term public interest.

‘CIPFA hopes that the forthcoming local government settlement recognises some of these realities and undertakes measures to meet some of these issues. We also believe that now more than ever we need an independent and evidenced-based approach to allocating funding to councils in a fair, reasonable and sustainable way.’

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