Council services ‘on the brink of collapse’

Next spending review will be ‘make or break’

LOCAL SERVICES are on the brink of collapse and will be damaged beyond recognition if the Government fails to plug an £8bn funding gap, council leaders warned today.

Chancellor Philip Hammond’s next spending review will be “make or break” for authorities that are already under huge funding pressures, the Local Government Association (LGA) said.

Councils will have faced a reduction in core funding from the Government of nearly £16bn in the decade up to 2020, according to the organisation representing town-hall leaders, and authorities face a funding gap of £7.8bn by 2025.

LGA chairman Lord Porter, the Tory leader of South Holland District Council, said councils are now no longer able to support residents and the vulnerable, let alone help the country prosper.

The deputy leader of Yorkshire’s biggest authority, Leeds City Council, said its £100m budget gap over the next three years and the increasing demands on adult social care meant “everything the council does is going to be squeezed even harder”.

Labour councillor James Lewis said: “It is making it even harder for us to provide universal services to people in Leeds and especially difficult for us to meet our objective of tackling poverty and inequality. This is against the backdrop of people paying ever more council tax because of government cuts to grant funding.”

The authority and its neighbouring councils are allowed to keep 100 per cent of business rates, rather than the normal 50 per cent, as part of a pilot scheme which may not continue after next year. And with two years to go until councils stop receiving central government funding altogether, the authority’s leader Judith Blake fears another recession could spell uncertainty for urban councils.

Lord Porter said: “More and more councils are struggling to balance their books and others are considering whether they have the funding to even deliver their statutory requirements. If the Government allows the funding gap facing councils and the local services to reach almost £8bn by the middle of the next decade then our councils and local services will be damaged beyond recognition.

“The impact on society – all places, all generations, every person – will be hugely damaging.

“Millions of people will be deprived of the vital local services that help improve quality of life and bind communities together.”

A spokesman for the Ministry of Housing, Communities and Local Government said: “We recognise the pressures councils are facing, so we are working with local government to develop a funding system for the future.

“Over the next two years, we are providing councils with £90.7 billion to help them meet the needs of their residents.

“On top of this, we are giving them the power to retain more of the income they get from business rates so they can use it to drive further growth in their area.”

THE PARLOUS state of the finances of local authorities across the region is becoming increasingly apparent, with rising council tax bills arriving in parallel with reduced services for residents on an annual basis as councils struggle to balance their books.

But the extent of the problems has now been illustrated by the Local Government Association, which has warned services are “on the brink of collapse” as authorities look to plug a financial black hole forecast to be almost £8bn by 2025.

From bin collections and rural bus services to road repairs and library provision, council bosses are being forced to make increasingly unenviable choices in where to cut their spending as they look to safeguard spending on vital statutory services for vulnerable children and adults.

Austerity measures in the wake of the global financial crisis have hit almost every area of public service spending but councils have been particularly affected, and are on course to have faced a reduction in core national funding of almost £16bn in the decade up to 2020.

The LGA has told Chancellor Philip Hammond that his next spending review will be “make or break” for many councils, while authorities are still awaiting the findings of a ‘fair funding review’ conducted by the Ministry of Housing, Communities & Local Government earlier this year.

A consultation on the latter report, which is considering how to devise a new way of funding the operation of the services provided by local authorities, closed in March and four months down the line, the department says the responses it received are still being analysed.

But it is increasingly clear time is of the essence in tackling the growing crisis in local authority funding as the current system creaks at the seams.