A report is coming out on Tuesday suggesting that councils are facing a doomsday scenario with cash cuts of 90 per cent by 2020 to services such as roads, libraries, leisure centres and parks.
The LGA has done the research to co-incide with its annual conference and the findings are stark. Unless there is reform of social care – perhaps under the Dilnot system – councils are heading for some existential decisions about what they can provide.
The chart shows neatly the problem faced by councils: The LGA anticipates that the main council grant will be cut by around 30 per cent in next year’s comprehensive spending review. (It is already being sliced by 28 per cent during the current Parliament).
Even if other revenues stay constant (council tax, business rates) that means a substantial decline in funding. But councils will be expected to maintain spending on waste, schools, fire/police, and care (which is a rising cost because of an ageing population).
The result: an effective 90 per cent cut to funding for services such as libraries, roads and parks by 2020 (at least based on a 2010 baseline) unless ministers solve the financial crisis in social care.
“Without money and reform there is no solution,” the report says. “We do not believe that this or any government would deliberately choose to do without filling potholes, funding the voluntary sector, commissioning public libraries or planning for economic development.”
The LGA warns that ministers need to consider radical options such as stopping ministers from holding back council tax increases or letting them levy their own “supplementary local taxes”.
Otherwise the government could have to repeal some of councils’ 1,300 statutory duties an exercise that would be “controversial, difficult and painful.”
The organisation came up with the startling 90 per cent figure – from 2010 to 2020 - based on a drop of £9.5bn in cash terms between 2010 and 2010.
For non ring-fenced services that meant a cash cut or more than 66 per cent by the end of the decade, the LGA found, from £24.5bn to £8.4bn. “Assuming that capital financing and concessionary fares are also funded in full, the modelled cash cut for remaining services rises to over 90 per cent,” it said. “With the best will in the world cuts to central services spending could not make enough money available to protect frontline services from drastic reductions.”
Only if ministers deal with the looming care crisis could some of that financial pressure be allayed, the report says. Care spending will pass 45 per cent of council’s budgets by 2019/20, up from about 30 per cent at the moment.
At present, however, the Dilnot recommendations are in the long grass, waiting for ministers to find money for the reforms in next year’s spending review, as my colleagues Sarah Neville and George Parker revealed recently.
Jim Pickard
Kiran Stacey