With the knowledge of the administration that will now be setting local authority budgets for the next five years, are local authorities any clearer on funding beyond 2015-16?
Local government has fared disastrously in its share of funding over the last parliament. While overall UK departmental budgets were increased by a modest 3.6%, health, education, transport and others have been consistently protected, forcing cuts on to less favoured departments; local government reduced by 34% over the same period.
For municipal authorities represented by the Special Interest Group of Municipal Authorities (Sigoma) the picture was even worse. An increasing proportion of the diminished funding was targeted not where it was most needed, but on growth incentives for which they have little chance of competing with their more prosperous neighbours.
The pre-election Budget remained silent on departmental budgets beyond 2016, though the subject has featured regularly in election discussions. In March, the chancellor dismissed the Office for Budget Responsibility’s projections of a £26bn cut to departmental budgets over two years, saying that only £13bn would be required.
This still leaves UK departments facing an average 4% cut. Considering the allocation of cuts so far, the implications for local government are unnerving, all the more so for municipal authorities under a funding distribution based on growth incentives. Every 1% cut to local government means another £200m of savings, so £800m of cuts over the next two years appears to be a ‘best case’, assuming the chancellor is as good as his word.
A relaxation of the cuts does not seem a realistic hope. The other ways in which local government could be assisted in maintaining services did not feature prominently in policies of the previous administration:
- A shift in the policy of selective protection of a few departments at the expense of others
- Relaxation of referendum rules on council tax
- Further discretion on income-earning powers
- Long-term settlements, to reduce uncertainty
- Recognition of the cost of demand-led services in settlements, placing service needs back at the top of priorities.
The hopes of local government for 2016-17 and beyond therefore lie currently in the post-election words of the prime minister that the new government will “make sure that the recovery reaches all parts of our nation, north and south, east and west”.
The promised June spending review should allay or confirm our worst fears.
Frances Foster, treasurer, Sigoma