A detailed picture of local authority funding under the new government is yet to come into focus but the funding protections for health, education and international development are likely to remain in place.
What of the non-protected departments, including local government? Without doubt, the financial outlook will remain challenging, with a potential £30bn fiscal consolidation on the horizon.
Many, including London Councils, support the idea that local government should have greater financial freedom and flexibility and that the current finance system is subject to excessive levels of central government control. Potential reform in this area should take into account what the system is trying to achieve and the principles underpinning change.
There are legitimate questions about whether or not the finance system, without reform, can continue to deliver. Councils have made some difficult decisions over the past four years. Often this has involved working with local people on innovative ways to run services that residents are passionate about, such as libraries and parks.
This approach has been successful to a certain extent. But in order to secure medium- and long-term stability a more ambitious approach is required; one that seeks to devolve power and responsibilities to the mayor of London and the boroughs, leading to more integrated and cost-effective local public services.
While councils have already led the way in sharing back-office services and reducing management costs, the truth is that these types of efficiencies alone will not save enough money to bridge the widening gap between council income and essential expenditure such as spending on adult and children’s social care. An emphasis on outcomes will increasingly replace organisational silo working.
London Councils is calling for the devolution and reform of responsibilities including skills, employment support, supporting people with complex dependencies, housing and health. Despite London’s economic success there are 465,000 people in the capital who are long-term unemployed, or who are economically inactive but want to work.
The 2015 spending review will be the platform on which the fiscal environment for boroughs over the next five years is decided. To understand its importance, we only have to look at the cost of 2010’s spending review for local government: a real-terms reduction of 45% in funding for London boroughs.
If nothing changes, this could be close to 70% by 2019-20. London Councils and the UK’s major cities are not advocating change for the sake of it, but to secure the future of the kind of public services people want, and need.
Jon Rowney, head of fair funding, performance and procurement, London Councils