Local authorities 'cannot cope with further cuts'

Conservative-run Local Government Association says councils already face funding black hole of £10bn

Councils in England and Wales cannot cope with further funding cuts because government policies have already left with them with a black hole of almost £10bn, the Local Government Association is claiming.

In a combative submission to the Treasury, the Conservative-controlled LGA said local authorities would struggle to provide basic services unless George Osborne, the chancellor, acknowledged they were already being penalised by policies such as changes to planning rules and the introduction of the “national living wage”.

Councils have had their government funding cut by 40% since 2010 and local government is certain to be in the firing line again when Osborne publishes his spending review in November. Departments where spending is unprotected, such as local government, have been told to prepare plans for cuts worth as much as 40% of budgets.

But the LGA fears the Treasury is not making allowance for the added costs local authorities already face. Councils in England and Wales spend more than £50bn a year, but a new LGA analysis estimates that they face extra, unfunded costs worth £9.9bn by 2019-20.

A figure of £3.6bn comes from what the LGA describes as “business as usual” costs: extra costs incurred through inflation and through factors such as demographic change, which mean care costs are rising because of the growing number of elderly people.

But the LGA says councils will face annual extra costs worth £6.3bn by the end of this parliament as a result of the impact of government policies for which local authorities have not been reimbursed.

One of the key ones relates to planning rules. In a bid to promote home ownership, the government has said that developers building starter homes for first-time buyers will be exempt from section 106 agreements, the rules which allow councils to impose a levy to fund affordable housing. The LGA says that this change alone could cost councils £3bn by the end of the decade.

Gary Porter, the Conservative councillor who chairs the cross-party LGA, said this analysis showed councils would be facing significant challenges even without the deep cuts anticipated in this autumn’s spending review.

Councils could not cope with further cuts without compensation, he said. “Leaving councils to pick up the bill for new national policies while being handed further spending reductions cannot be an option,” said Porter, who was made a peer in last week’s honours list.

“Enormous pressure will be heaped on already stretched local services if the government fails to fully assess the impact of these unfunded cost burdens when making its spending decisions for the next five years. Vital services, such as caring for the elderly, protecting children, collecting bins, filling potholes and maintaining our parks and green spaces, will simply struggle to continue at current levels.”

The LGA says Osborne’s decision in his last budget to cut social housing rents by 1% a year will cost councils £2.6bn – or the equivalent of the cost of building 19,000 new homes.

Councils will need an extra £1.75bn to process business rate appeals when revaluation is introduced in 2017, the LGA says, and it estimates that universal credit could cost authorities up to £1bn because overpaid housing benefit will be harder to recover.

Paying the national living wage to council staff and care workers will cost councils £834m by 2019-20, the LGA says, while £172m a year will be incurred as a result of a supreme court ruling last year that will lead to more elderly people who face being taken into care undergoing a deprivation of liberty safeguards (DoLS) assessment.

Porter said councils needed fairer funding and more devolution. “If our public services are to survive the next five years, councils need fairer funding and the freedom to pay for them,” he said.
“Only radical reform of the way public money is spent and widespread devolution of transport, housing, skills and health and social care across England in the spending review can protect the services which bind our communities together and protect our most vulnerable.”

http://www.theguardian.com/society/2015/sep/01/local-government-association-cannot-cope-further-cuts?CMP=share_btn_tw

What do Osborne and Co care, they are sitting pretty and have made sure their mates are as well.