Years of unprecedented funding reductions have had a significant impact on the local services our communities rely on, and the knock-on effect on other parts of the public sector. We have repeatedly warned of the serious consequences of funding pressures facing local services from unprecedented funding reductions since 2010 and growing demand for services.
Key messages
- Funding reductions: The recent report from the National Audit Office (NAO) found that local authorities experienced a 49.1 per cent real terms reduction in central government funding between 2010/11 to 2017/18.1 We have repeatedly warned of the serious consequences of funding pressures facing local services from unprecedented funding reductions since 2010 and growing demand for services. Inadequate funding for local government has a knock-on effect on other parts of the public sector.
- Funding gap: Councils in England face an overall funding gap that will exceed £5 billion by 2020. The Government must urgently secure the financial sustainability of local government and the 1,300 different statutory duties and responsibilities councils provide.
- Demand and cost pressures: In recent years councils have faced a range of new demand and cost pressures. The growing demand for services including adult social care, children’s services and homelessness support means councils are increasingly having to divert scarce resources from other local services on which residents rely.
- New Burdens: Our assessment of the funding gap relates to current costs and responsibilities and does not account for new costs that are out of local authority control or new burdens imposed through revised central government policy. For example, the impact of the National Living Wage on pay structures, statutory responsibilities under the Homelessness Reduction Act and unexpected exceptional costs arising from conducting fire safety and major remedial work. We call on the Government to provide sufficient funding to cover these new costs and any future new burdens. Leaving councils to pick up the bill for unfunded government policies, at the same time as managing spending reduction and such growing demand for services, is unacceptable.
- Reserves: Reserves are designed to help councils manage growing financial risks to local services and not to address the ongoing underfunding that they face. The size of the cuts councils are having to make is simply too big to be plugged by reserves.
- Financial certainty: Core central government funding to councils will be further cut in half over the next two years and almost phased out completely by the end of the decade.2 In addition, there is huge uncertainty over the amount of funding available to local government from April 2020 and how greater business rates retention and the Fair Funding Review will impact on individual local authorities. The issue of future funding for adult social care being considered through a Green Paper, and wider work, adds further uncertainty. The Government needs to urgently address the 2020 cliff-edge and the growing funding gaps facing local services. We are calling on the Government to commit to allow local government, as a whole, to keep every penny of business rates collected to plug this funding gap.