Tackle councils’ funding issues or services will get worse, MPs warn

21 Aug 19

MPs are calling on the government to tackle the £5bn funding gap faced by local authorities, warning that services will continue to decline until it does so.

A decade of funding cuts and increasing pressure on services, especially social care, has left many councils operating a ‘bare bones’ service, with non-essential spending all but gone, according to a report released today by the Housing, Communities and Local Government Committee.

Chair of the committee Clive Betts said: “There is a disconnect between the services taxpayers expect their local authorities to provide and the level of service possible under current government funding.

“People expect well-maintained roads, regular refuse collections and cultural services, yet funding rarely stretches beyond meeting the urgent needs of social care services.”

Because most people do not use services like social care, on which the largest proportion of council budgets is spent, Betts said taxpayer confidence suffers.

The committee, comprising Labour and Conservative MPs, called for the government to reform the business rates retention system, which is “too complex and lacks transparency”, and to consider bringing back the revenue support grant.

They also urged the government to reform the council tax system to reflect today’s house prices, as well as increase the number of bands to raise more tax from the highest value properties.

Betts criticised the government for not yet having given local authorities certainty over funding for the next few years - or even for 2020-21.

The recent announcement of the one-year ‘spending round’ does not allow councils to plan ahead, and might lead to some making unnecessary and harmful cuts as they fear the worst, the report claimed.

Betts said: “The government’s attention has been elsewhere for too long, and it must now establish a system of funding that both addresses immediate need and supports local authorities in meeting challenges of the future.”

CIPFA chief executive Rob Whiteman said the committee is “absolutely right” to conclude local government revenue streams need reform.

He said: “In the immediate term, government must provide clarity over both its expectations of the sector and the funding position beyond 2020 to allow councils to plan for the future and the continuing rise in demand for services.”

Chair of the Local Government Association, the organisation that identified the £5bn funding gap, James Jamieson said a third of councils were worried they will run out of the funding they need to be able to provide their statutory services within three years.

He said: “Only with the right funding and powers can councils meet their legal duties and protect the wide range of other valued local services which also make such a positive difference to communities and people’s lives.”

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