How much longer can our councils survive these cuts, Chancellor?
GOVERNMENT FUNDING IN REGION HAS BEEN SLASHED
GOVERNMENT funding for North East councils has almost been cut in half since 2010, the national spending watchdog has stated.
As a result, councils are increasingly focusing on social care while other services such as housing and cultural activities take the brunt of cuts.
The National Audit Office (NAO) warned that the finances of councils across the country have “worsened markedly” and the situation is “not financially sustainable over the medium term”.
NAO head Amyas Morse said: “Current funding for local authorities is characterised by one off and short-term fixes.”
The findings were published in a new report looking at the financial sustainability of local authorities.
As part of the study, the NAO published data showing how funding for local councils has changed since the 2010-11 financial year after compensating for the effects of inflation.
It found that central government funding for Newcastle City Council has fallen by 48.8% once inflation is taken into account. This is roughly the same as the national average.
Total funding for Newcastle has fallen by 35.8%. This includes money that comes from council tax and other sources.
It shows that while increases in council tax have partly compensated for cuts in central government grants, the council’s total budget is still significantly down.
Newcastle’s total spend in the 12 months up to April 2017 was £206.6m.
As it attempted to control costs, the council cut spending on housing by 60.7% in real terms between 2010 and 2017, and spending on cultural and related services also by 60.7%.
This allowed it to cut spending on adult social care by the relatively low figure of 12.1%, although spending on social care for children fell by 37.5%.
It was a similar picture in other local authorities.
The National Audit Office said: “Local authorities have protected spending on service areas such as adult and children’s social care where they have significant statutory responsibilities, but the amount they spend on areas that are more discretionary has fallen sharply.”
Funding shortages are getting more difficult to cope with, the National Audit Office said.
“Compared with the situation described in our 2014 report, the financial position of the sector has worsened markedly, particularly for authorities with social care responsibilities. We noted in 2014 that the sector had coped well financially with funding reductions, but our current work has identified signs of real financial pressure.
“A combination of reduced funding and higher demand has meant that a growing number of single-tier and county authorities have not managed within their service budgets and have relied on reserves to balance their books. These trends are not financially sustainable over the medium term.”
Lord Porter, chairman of the Local Government Association, said: “Councils’ ability to maintain local services at a time of inadequate resources and rising costs is already extremely stretched, and the NAO rightly warns about the huge uncertainty over how the Government intends to fund local services after 2020.
“The Government needs to urgently address this cliff-edge and the growing funding gaps facing local services.”
Responding to the report, a Government spokesman said: “Last month, Parliament approved a funding settlement which strikes a balance between relieving growing pressure on local government and ensuring hard-pressed taxpayers do not face excessive bills.
“As part of this, we delivered a real terms increase in resources over the next two years, more freedom and fairness, and greater certainty to plan and secure value for money.
“We are currently working with councils to undertake a review of their needs and resources. Our consultation on this closes on Monday, and all responses will be considered as we look to devise a new funding system.”