This year has not been easy for local government. With several councils teetering on the brink of financial collapse and many vital services depleted, the sector is in crisis.
Given the scale of the financial challenge, it may be surprising to some that the Chartered Institute of Public Finance and Accountancy and the Institute for Government’s latest performance tracker found public satisfaction with local services broadly held up.
The data shows that neighbourhood services provision appears not to have fallen at the same rate as spending, and the drop in resident satisfaction since 2012 has not been as large as the decline in spending. Local authorities have become more efficient.
These figures show how well local authorities have coped under years of fiscal retrenchment, but they must not encourage complacency. The efficiency figures do not account for the impact on staff, the use of unearmarked reserves and shifting costs onto individuals.
Regarding staff, the several case studies of local authority savings emphasise the increasing productivity of its workforce, but do not explore the impact on morale or retention. In libraries, for instance, full-time paid staff per library has fallen drastically from the equivalent of 4.6 full-time paid staff per library in 2009-10 to 3.8.
In terms of unearmarked reserves, the performance tracker highlights how the changes in levels of reserves clearly shows how the sustainability of the sector is under threat.
Since 2015-6, reserves have fallen. And whilst the latest local authority outturn figures for 2017-8 show that reserves have increased by 2.7%, this is largely due to the funds collected through the social care precept.
Cipfa and the Institute for Government think the decline in reserves suggests local authorities are struggling to meet their day-to-day costs and are having to draw on their emergency funds to pay for services, particularly in areas such as social care – now 54% of local government spending.
Because the significant cost of social services is crowding out other spending, where local authorities can get people to pay directly for services they are often doing so.
But without any extra funding, the size of the local government services on offer will shrink. Figures from the Office for National Statistics show that if the government chose to keep commitments on health, long-term care and payments to pensioners, it would have nothing left for anything else.
If local authorities have no choice but to pay for services by charging individuals, drawing down on reserves and by cutting staff, they will not be able to work at current levels of efficiency. Public satisfaction will drop.
In the short-term, the only way to prevent this is to give local authorities a fairer financial settlement in the next spending review.
Don Peebles, head of policy and technical, Chartered Institute of Public Finance and Accountancy