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Rob Whiteman: The reign of short-term cash injections must end

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It would be apt if the government is feeling a bit squeezed as it readies itself for the spring statement, given local authorities have felt that way for almost a decade of austerity.

Report after report warns that many vital services that families around the country rely on are being put at risk.

One recent example from the public accounts committee showed overall spending by local authorities on services fell by 19.2% in real terms between 2010-11 and 2016-17. Since then, several large funding injections have been required to ensure local government can be sustained in the short term, including the £1.4bn announced in the 2018 budget. The committee even accused ministers of being in denial over the issues this is creating.

Another recent report from the Institute for Fiscal Studies on the outlook for this year’s spending review forecast that public sector austerity rather than coming to an end is likely to continue. This was forecast until at least the middle of the next decade and quite possibly beyond, given the looming impact of Brexit.

Meanwhile the National Audit Office reports extraordinary levels of pressure on children’s social care, while the Centre for Cities shows local authorities are grappling with high levels of deprivation, increased crime and climbing social care costs. Each report lays bare the dire situation for local authorities, and paints similarly concerning pictures for the future of public services.

There is a chorus now for the government to engage with local authorities by offering genuine long-term, sustainable solutions, instead of repetitive short-term cash injections that do nothing to help authorities plan. For there to be deep and significant change, such as true devolution, action needs to overtake the rhetoric of the past 40 years.

This is now urgent. Cipfa’s financial resilience index shows that while in the short term most councils are financially stable there is a tail of around 10-15% of local authorities showing signs of risk to their financial sustainability.

Last year, our performance tracker with the Institute for Government highlighted that when cuts across all government activity are initially too deep, as we have seen in prisons or social services, it can be difficult to rebuild. This is happening right now, and some of the cuts being made to public services are liable to cost taxpayers more in the long run.

It makes you wonder what disaster will need to befall our public services for there to be a true shift. Last year’s section 114 notice in Northamptonshire was not enough. Perhaps the worst outcome is what is happening now, which is the slow erosion of our public services, with only keen observers and those who are most affected taking an interest.

Effective financial management in the public sector has always been built on planning for the long term. I hope this would still secure agreement from both sides of the political aisle. Yet somehow this fact seems to have been lost, and the reign of short-term cash injections seems set to continue for local government.

We have been promised a comprehensive spending review later this year. Whether it will bring real change remains to be seen: so much of Whitehall’s bandwidth is focused on Brexit. But the evidence cannot be ignored for much longer. A lack of real comprehensive action would be reprehensible.

Rob Whiteman, chief executive, Chartered Institute of Public Finance & Accountancy

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