Council cuts in the Budget will be a false economy, LGA tells Osborne

14 Mar 16

Councils have urged George Osborne to impose no further cuts on local government in this week’s Budget statement following warnings from the chancellor that public spending might be cut further.

In a submission to the Treasury, the Local Government Association highlighted that more than half of all day-to-day departmental spending by the government – health, schools, defence and overseas aid – was currently protected from cuts. If this continues, other unprotected areas, including local government, could be hit by further reductions, the umbrella group warned.

In the Spending Review last November, Osborne announced average cuts to Whitehall of 19%, but has since indicated that further reductions may be needed due to worsening economic conditions.

The LGA stated that councils face significant reductions in government grants over the next four years, and chair Lord Porter called on Osborne not to exacerbate these challenges by deepening planned cuts.

“Councils have more than played their part in trying to balance the nation’s books in recent years and all councils will have to continue to find substantial savings from local services to plug funding gaps over the next four years,” he said.

“Extra council tax powers and transitional funding will help some but won't be enough to completely offset the full impact of funding pressures.”

Cuts to councils have a knock-on effect on other parts of the public sector, such as the NHS, which are left to pick up the pieces, he added.

“As a result, the LGA insists that ringfencing certain budgets no longer makes any sense and could put the very services being protected at risk,” he added.

Porter also highlighted that the government had decided to give councils the option to fix four-year funding deals in last December’s settlement for the sector. It would be perverse to then undermine this with further cuts handed down just one month later, said Porter.

The submission also reiterated calls for councils to be given additional powers to boost housebuilding and to increase the number of school places and reduce unemployment through greater devolution of public services. It also called on Osborne to bring forward the planned £700m increase in the Better Care Fund pledged by 2019/20 to this year, and for reform to the system of business rates appeals ahead of full localisation.

“The government should use our submission as the blueprint for empowering local government to play a leading role in balancing the nation’s books while improving public services and local economies,” Porter concluded.

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