Councils continue to suffer from the Labour legacy

Copied from Local Government Chronicle online
Next five years to see higher-than-expected cuts
10 December, 2014 | By Kaye Wiggins

Council spending is set to be over 4% lower than previously projected in both 2016-17 and the following two years, it has emerged, after George Osborne heralded “colossal” spending cuts.

Forecasts published by the Office for Budget Responsibility in the wake of the autumn statement last week showed “net current expenditure” by English local authorities would be £106.9bn in 2016-17, down from the £111.9bn forecast by the watchdog in March.

The OBR’s latest forecast for 2017-18 spending is £106.9, down from £111.6bn in its March forecast. In 2018-19 the OBR predicts spending will fall by £4.9bn more than it forecast in March.

The revised forecasts, which have emerged as councils await the publication of the provisional local government finance settlement for 2015-16, were due in large part to a steeper-than-assumed fall in central government grants to councils.

This came after the publication of the autumn statement revealed plans to accelerate public spending cuts in a bid to balance the budget by 2018-19 and generate a surplus by 2019-20.

The OBR’s gloomy forecasts also showed local authority current spending, excluding education, public health and housing benefit, would fall from 4% of nominal GDP in 2009-10 to 2.5% by 2019-20. In 2014-15 the figure is 2.9%.

In a speech on the day of the autumn statement, OBR chair Robert Chote said there was “no robust basis” on which to assume that cuts in overall public spending were “undeliverable”.

Mr Chote noted that councils were “in aggregate still adding to their financial reserves rather than running them down.”

The OBR’s figures showed non-schools reserves would rise from 10.7% of councils’ net current expenditure in 2009-10 to 24% in 2019-20. The watchdog has assumed councils will add to their current reserves by £1.5bn in 2014-15 and will continue to add to their reserves, but by decreasing amounts, until 2018-19.

The OBR reached its figures using Treasury policy assumptions for total spending after 2015-16, assuming grants to local government remained the same as a proportion of overall spending as they were due to be in 2015-16.

The figures emerged as Paul Johnson, director of the Institute of Fiscal Studies, said public spending cuts would be made on a “colossal scale” over the next five years. This could cause the “role and shape of the state” to change “beyond recognition”, he said.

Jon Rowney, London Councils’ strategic lead for finance, procurement and performance, told LGC: “Our early analysis suggests the pace of the cuts could be steeper and faster than previously thought.” The body had previously estimated London boroughs would see a 60% reduction in core funding from central government between 2010-11 and 2018-19.

Local government minister Kris Hopkins said: “What these figures actually show is a big increase in council reserves. Local authorities should of course maintain a healthy cushion when balancing the books but such substantial reserves are completely unnecessary and should be tapped into to protect frontline services and keep council tax down.

“Councils should be making creative use of reserves to address short-term costs, such as restructuring or investing now to realise savings in the longer-term.”


What chance for the Big Society

Two issues I’m dealing with in the ward at present, offer a demonstration of the challenges involved in making David Cameron’s Big Society work on a practical level.

The first one is a fairly minor matter in the great scheme of things, but to the person affected it is a very real problem and one that is leading to some distress for the lady concerned. Her problem is with a neighbour who is neglecting his garden to the point that it is spoiling hers. Having spent good money getting her front garden made low maintenance, she now finds it blighted by wind blown weeds from the neglected garden next door.

Despite the best efforts of council officers to persuade the gentleman to do the right thing, he continues to do the bare minimum. This means that he doesn’t really fix the problem, but his neglect isn’t bad enough to justify any sort of legal action.

The second case is more serious, because of the activities of another bad neighbour. In this case, as well as having an impact on their neighbours, these people are allegedly carrying out certain illegal activities. Numerous comings and goings, often for less than 5 minutes at a time, suggest that these people are not coming around for a cup of tea. A large number of different vehicles, often taking up other residents’ parking spaces, also suggests that these are far from your normal neighbours. Some residents also report seeing scrap metal, farm equipment and even red diesel being handled at various times. It seems that our local police are ‘aware’ of these people, but have been unable to catch them in the act.

If we are struggling to deal with people who fail to be good neighbours and who spoil the quality of life of those around them, with our current but reducing resources, will the Big Society offer better or worse solutions?