Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

We can't do it all

  • Comment
The local government finance system has evolved into a fine balancing act skilfully performed by councils, says LGC editor Karen Day.

But this year authorities are going to need a particular form of dexterity bordering on acrobatics to balance their books.

Central grant and council tax revenue added together haven’t quite filled all the coffers, particularly when large swathes of services have never been fully funded - take adult care.

The returns on investments and income from charges, particularly parking in urban areas, have helped make up the difference, balance central government policy and keep jobs and front-line services intact. But that was 12 months ago. Then we could depend on stable interest rates, consistent consumer spending and far fewer public demands.

Today, the sums don’t quite add up. Interest rates were cut to 1% on Friday, the lowest for 300 years, removing around£600m from local government’s expected investment returns.

There’s the hangover from the Iceland debacle, with some councils still waiting to see if their cash will ever be released. Fewer residents are paying charges and council tax and more want debt counselling, housing and service support.

At the same time, the government is urging councils to support business and residents while meeting efficiency demands and keeping council tax increases “substantially below” 5%.

There are already councils sailing close to the wind at 4.9%. It says a lot about their predicament that they’d risk capping and the cost of reissuing bills, but there is little alternative. Something somewhere has to give.

Despite the positive message that councils are stepping in to help smooth the recession, there is only so much they can do. If councils are not to be left as a scapegoat for a poor finance system that is shamefully inflexible then we have to be realistic about what it can do.

The government has mistakenly raised public expectations that it can control this recession and mitigate all its effects. It can’t. And neither can local government.

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.