Local authorities face enormous pressure: their financial position is continuing to deteriorate as demand for vital services increases. Over the last eight years, the government has cut the funding it gives to English local authorities by nearly half., while, at the same time, demand for critical council services has risen: housing is under strain with over a third more people homeless and adult and children social care are confronted with growing demand. The rate of looked-after children, for example, is at a 25-year high. The cost of adult and children’s social care has forced many local authorities to reduce spending on services in other areas. Some councils are now in an extremely worrying position: overspending their budgets for social care, reducing key services, falling back on financial reserves and increasingly relying on generating other sources of income, which comes with greater risks.
The Ministry of Housing, Communities and Local Government (the Department) are relying on short-term approach to a long-term problem. Overall spending by local authorities on services fell by 19.2% in real terms between 2010-11 and 2016-17. The government has had to inject large amounts of additional funding to ensure that the local authority sector can keep going in the short-term: £1.4 billion in the 2018 budget. Yet disturbingly, there is still no sign that the Department has a clear plan to secure the financial sustainability of local authorities in the long-term. The Department continues to insist that the sector is sustainable but refuses to provide the evidence that Parliament and the public need to be assured that this is actually the case. The Department has rejected a number of the Committee’s previous recommendations on these subjects. We are deeply frustrated to have to repeat the same concerns about the sustainability of the sector and the ability of local authorities to provide the vital services that taxpayers need.
Published: 6 February 2019