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Councils lose out on £4bn as jobs go

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Councils have been hit by a £4bn deficit in income over the last two financial years - and 7,000 jobs have gone in the past six months.

A depressed property market and plunging interest rates are among the contributory factors, the Local Government Association said.

The LGA said it was equivalent to losing out on almost £11m every day this year. In six months, 7,000 jobs had been cut.

It estimated that sales of land, council buildings and other capital projects have fallen by £2.7bn since 2007-08 while interest earned on councils’ cash deposits has fallen by £1.3bn since 2007-08 due to low interest rates.

LGA vice chairman Sir Jeremy Beecham (Lab), said: “Town halls are being hit by a perfect storm caused by the recession. Sources of income have dropped sharply at a time when more and more people are turning to councils to help them through tough times.

“Town halls are feeling the effect of recession in exactly the same way as hard pressed homeowners and families.

“Low interest rates mean councils are much less able to rely on their savings, plummeting house and land prices have hit hard and income from leisure centres and a range of other services has fallen.”

Unison said the LGA was in danger of being accused of “crying wolf”.

Lucille Thirlby, the union’s senior national officer for local government said: “Unison knows that some income streams are down but there are two sides to the coin and councils are also benefiting from low inflation.

“Local Government leaders should be coming up with solutions to maintain and improve the services that people rely on, particularly at this difficult time.

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