LGA report warns that Councils are facing financial tipping point

Councils across England are facing a financial “tipping point” and services like leisure facilities, children's centres and pothole repairs are likely to bear the brunt of funding cuts over the next two years, the Local Government Association (LGA) has stated. Fees and charges will rise, and reserves will shrink, its research shows.

The LGA says the impact of spending reductions will start to become increasingly visible over the next two years, as councils tackle a further £10bn cut in government funding.

In its ‘Under Pressure’ report, the LGA surveyed councils in England about their strategies for dealing with the next round of cuts. In 2015-16, three in five councils say there will be ‘no efficiencies left’ to be made, or that efficiencies alone will not be enough to tackle that year's cuts and more services will be cut back or scrapped.

Cllr Gerald Vernon-Jackson, vice-chairman of the LGA, said: “It is testament to councils' resilience that many people have noticed relatively little difference in most of their local services over the past three years.
“Faced with the biggest cuts in living memory, councils have restructured and shared services where it has been possible and have made the most efficient part of the public sector even more efficient. However, efficiency savings cannot be remade and we are now reaching the end of the road.

“We need to find a better way to ensure public money gets to the frontline where it is most needed and doesn't get lost in the maze of Whitehall. Otherwise we risk sleepwalking into a situation where an upturn in the economy coincides with a decline in public services.”

The LGA research showed that two in five councils will try to stem the impact of cuts by trying to raise more money – through investment, fees and charges. This could include councils increasing charges for discretionary services like leisure centres to a level where they are self-funding and less reliant on money raised through taxation. And half of councils (48%) will use money set aside in reserves as a short-term fix to balance budgets and delay the impact of cuts next year.

According to the LGA, government funding given to councils to run local services will have been cut by 40% by May 2015. LGA modelling, which factors in reduced funding and rising demand for adult social care, also shows that money available to provide popular services like running gyms, parks, libraries and youth centres is likely to shrink by 66% by the end of the decade.

A total of 73 English local authorities replied to the LGA’s Under Pressure report, which also highlighted that at least 95% of English councils have now engaged in some form of shared service delivery resulting in savings of £357m to combat the cuts.