Local councils amongst biggest losers from CSR

One of the biggest losers from the Comprehensive Spending Review was local government, though the full scale of the cuts will not emerge till December.

Our guest writer is Jessica Studdert, political adviser to the Labour group at the Local Government Association (LGA)

One of the biggest losers from the Comprehensive Spending Review was local government. Having, in the past, over-delivered on Treasury efficiency targets, local authority budgets have much less slack to tighten yet now face real terms reductions of 28 per cent over the next Parliament. This is a much tougher settlement than other parts of the public sector, and compares with overall cuts of 8.3  per cent across all government departments.

The fall in local government grant is significantly frontloaded which means that the first year 2011-12 cuts will be much deeper. This means councils will have little time to plan for the quick restructuring that is now required. Frontline services will inevitably be hit hard as councils face extremely difficult choices about which they can keep running.

As Cllr David Sparks, leader of the LGA Labour group, said:

“This is going to have serious knock-on effects for local public services which all our residents, including children, families and the elderly, rely upon.

The topline 28 per cent cuts do not cover the full story. Local authority capital funding was also cut, by 45 per cent, again significantly steeper than the cuts in capital funding across the whole of the public sector, which average 29 per cent. There are also some ‘known unknowns’.

Small print in the CSR document suggests some CLG’s resource budget, which will reduce by 33 per cent in real terms, will be part devolved to local government, which could indicate further overall reductions, although this is not yet clear. There will also be knock-on effects from cuts to social welfare and housing, as the costs of delivering statutory services will increase due to increased demand for them.

The full picture for each individual local authority will not emerge until the local government settlement is announced by early December. There is likely to be significant variation in what different local authorities stand to lose or keep, and the impact is unlikely to pass the Chancellor’s ‘fairness’ test.

Area Based Grant covers additional revenue funding allocated according to specific policy criteria and many ABG funding streams are calculated according to need. Significant cuts to some ABGs were already announced in the summer, and yesterday Eric Pickles wrote a letter to Local Authority Leaders informing them that remaining grants, including housing related support for vulnerable people, would now be rolled into Formula Grant.

Formula Grant has a greater element of central allocation that is the same for all local authorities, so there is a fear that the potential merging of ABG into Formula Grant will mean that the poorest areas will see their current spending cut disproportionately higher than wealthier areas.

The cut in council tax benefit also creates potential for uneven distributional impacts between local authority areas. Cutting 10 per cent of the overall council tax benefit bill might not have much of an impact in Richmond, but further down the Thames in Tower Hamlets it will be more significant. Councils will either have to find the money from elsewhere, or those less able to pay will again be hit harder, and council tax arrears could be forced up.

The potential cumulative impact of these reforms on our communities, when set against the mere 14 per cent by which the Royal Family must tighten their belts, casts doubt over the Government’s claim that “we’re all in this together”.

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16 Responses to “Local councils amongst biggest losers from CSR”

  1. John Edginton

    RT @leftfootfwd: Local councils amongst biggest losers from #CSR: http://bit.ly/cIZO4k

  2. Keith Phillip Jones

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  3. Samuel Tarry

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  4. Tom Reynolds

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  5. William Green

    Follow me to see how cuts could be higher & 'stealth' tax @leftfootfwd Local councils among biggest losers from #CSR: http://bit.ly/cIZO4k

  6. Jay Baker

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  7. Laura Purll

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  8. nakedCservant

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  9. jeff_h

    dear left foot forward. congrats on separating comments and tweets. could you now make the comments counter equal to the comments rather than comments plus tweets. there’s nothing more annoying than seeing 20 comments, clicking on the link and they’re all tweets.

  10. Mr Jabberwock

    Those of us who deal with local government on a daily basis (as a supplier of voluntary sector services) know at the sharp end that local authorities are just about the most inefficient organisations that could be imagined. There is no question that they could save half of that needed just by running themselves on the same basis as those of us who have to deal with them do.

    This is not party political point – the party in power makes negligible difference to this – so I recognise that it is not just a pull your socks up and sort yourself out issue. It will be difficult and painful to cancel all those pointless meetings, nonsense posts and go nowhere initiatives; it will take cultural change to fix and that is hard work.

    But please no more these vested interest statements suggesting that LAs are efficient – that is not credible.

  11. Hazico_Jo

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  12. Mr. Sensible

    In my area, we’re already seeing the local authority cut frontline services.

    And it is also cutting funding it gives to the voluntary sector; so much for the ‘Big Society!’

  13. UNISON East Midlands

    Local councils amongst biggest losers from CSR http://is.gd/gbTo2

  14. Kevin Richards

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