Council leaders have accused the government of imposing some £1bn of cuts by stealth, leaving town halls dealing with an even bigger reduction in income than they had been braced for. The spending settlement of 2010, which covers most of this parliament, saw local government take a steep cut of 28 per cent to their main grant over a four-year period.
The latest phase of these reductions will be announced in mid-December by the Treasury, just days after George Osborne’s Autumn Statement. However, the Local Government Association says it has identified nearly £1bn of additional cuts or delays to grants in recent months, further adding to their woes. In some authorities these cuts could amount to “more than 10 per cent of core funding from government”, the LGA warned in a briefing note to council leaders seen by the Financial Times.
Local government had hoped that 2013-14 would be a year when overall government funding would be “reasonably stable” after two years of steep cuts, according to the group. Under those proposals, set out in the comprehensive spending review, there should have only been a 0.8 per cent cut to this year’s core funding – after 9 per cent cuts in both 2011/12 and 2012/13. However, “what we are now seeing is the prospect of potential funding reductions that . . . amount to a total funding reduction of up to a further £1bn or more,” the document says.
The £1bn figure for cuts and deferred grants includes £345m of delayed business rate payments and £200m of education support funding switched to academies. The figure also includes a £150m reduction in the early intervention grant and £100m of “under-funding” from changes in council tax benefit. The final component is an estimated £200m stemming from a pay freeze in local government which the Treasury clawed back from councils.
One Whitehall official said that some of the LGA’s calculations had been “disingenuous”. A spokesman for the communities department said that the full details of next year’s spending would not be clear until the local government finance settlement in December. “Councils account for a quarter of all public spending – this year English councils will spend £114bn – so it is vital they continue to play their part tackling the inherited budget deficit,” he said.
But Sir Merrick Cockell, chair of the LGA, said he was in talks with senior ministers to try to “sort out” the issue. “This has significant implications for all local services. In particular it threatens to severely limit councils’ ability to promote growth at a local level, which would be hugely counterproductive,” he said.
The group has previously warned that the last spending review, combined with the rising cost of social care, will mean that money for non-statutory services such as libraries and leisure centres will have been slashed by 90 per cent in cash terms by 2020.