Councils in England could face a £3.3 billion reduction in central government funding for local services in 2016/17, new analysis by the Local Government Association (LGA) reveals.
The LGA’s annual ‘Future funding outlook report’ published today warns councils will need to make further significant savings next year, equivalent to 12 per cent of their total budgets.
Using the most recent Office for Budget Responsibility forecasts, LGA analysis predicts councils will see funding for local services reduced by a further 11 per cent in 2017/18 and 4 per cent in 2018/19 before increasing by 7 per cent in 2019/20.
It predicts this will leave councils facing a funding gap of £9.5 billion by the end of the decade.
This will be caused by a combination of reduced government funding and rising demand being placed on adult social care services by our ageing population and will add pressure on vital services like buses, fixing the roads, leisure centres and libraries.
Spending on social care and collecting waste will continue to absorb a rising proportion of council resources. Funding for other services will drop by 35 per cent in cash terms by the end of the decade, from £26.6 billion in 2010/11 to £17.2 billion in 2019/20.
The LGA said the financial challenge facing councils illustrates the urgent need for radical reform of the way public services are paid for and delivered.
Next week the LGA will launch a separate report at its Annual Conference setting out detailed Spending Review proposals for the Government to ensure local services survive the next few years.
LGA Chair Cllr David Sparks said:
“Core local government funding has been protected from further in-year cuts in the Budget but it is clear the Spending Review in the autumn will see councils continue to face challenging funding reductions and spending pressures over the next few years.
“Councils have already made £20 billion in savings since 2010 following reductions in government funding of 40 per cent and have worked hard to shield residents from the impact of funding cuts.
“There are no efficiencies left to be made for many councils while many now warn efficiencies alone will not be enough to cope with further funding cuts. Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels.
“If our public services are to survive the next years, we urgently need a radical shift in how public money is raised and spent, combined with proper devolution of decision-making over transport, housing, skills and social care to local areas.
“Fairer funding for local services, and the freedom to pay for them, will allow councils to tackle the big issues facing their residents and protect services which bind our communities together and protect our most vulnerable.”