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LGA warns Osborne over cost pressures

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Councils will face almost £10bn of cost pressures by 2020, the Local Government Association has warned in its submission to the government’s spending review.

It said it had calculated that government policies to be implemented over the next five years would cost councils £6.3bn on top of the £3.6bn needed to meet inflation and demand-led pressures caused by everything from the living wage to the oak processionary moth.

Services could be lost or cut unless chancellor George Osborne took these pressures into account in his November review, the LGA said.

Examples it cited of cost pressures included £3bn from exempting builders of starter homes from planning gain payments, £2.6bn from the Budget decision to cut social housing rents by 1% per year and £1.75bn to cover the expected volume of business rate appeals arising from the 2017 revaluation.

Paying the national living wage to council staff and care workers would cost £834m a year by 2019-20, closely followed by £797m needed for increased National Insurance contributions following the end of state pension contracted out arrangements in 2016.

Less predictably, the LGA said councils faced an unexpected cost of £100m to treat attacks on trees caused by ash dieback and oak processionary moths.

LGA chair Lord Porter (Con) said: “Our new analysis shows the significant spending pressures facing councils over the next few years even before the possibility of further funding reductions. 

“Leaving councils to pick up the bill for new national policies while being handed further spending reductions cannot be an option.”

He said only devolution of control over spending on transport, housing, skills and health and social care could protect services.

“If our public services are to survive the next five years, councils need fairer funding and the freedom to pay for them,” he added.

Cost pressures facing local government over the next five years (£m) (source: LGA)

 

Year2016-172017-182018-192019-20
‘Business as usual’1,0831,8662,7283,576
Other costed policy-specific pressures3,3326,4165,4816,311
Total pressures4,4158,2828,2099,887
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