IFS report warns action needed on ‘unsustainable’ funding of English councils

The funding system for English councils is “unsustainable” and the Government must take action to address it, a report has said.

The Institute for Fiscal Studies (IFS) said funding for local authorities in England fell by 21% between 2009-10 and 2017-18.

Spending on planning and housing services dropped by more than 50% while leisure and transport departments saw cuts of more than 40%.

Researchers for the IFS said things are set to get worse as revenues from council tax and business rates are unlikely to keep pace with rising costs and demands.

David Phillips, IFS associate director, said: “Current plans for councils to rely on council tax and business rates for the vast bulk of their funding don’t look compatible with our expectations of what councils should provide.

“A proper national debate on how much we are willing to pay and what we expect of councils is therefore needed.

“Without it, we will default to a situation where the services councils can provide are gradually eroded without an explicit decision being taken – until ad hoc funding is found as a response to political pressure.”

Richard Watts (pictured), chairman of the Local Government Association’s resources board, said the Government’s upcoming spending review will be “make or break” for local services.

He added: “If the Government fails to adequately fund local government in the spending review then there is a real risk to the future financial viability of some services and councils.

“Fully funding councils is the only way to ensure councils can continue to provide all of the valued local services which make such a positive difference to communities and people’s lives.”

Andrew Gwynne, Labour’s local government spokesman, said the Government needs to “wake up and smell the coffee” on council funding.

He added: “The human cost of the cuts to services is appalling.

“Local government is under enormous pressure because of politically motivated cuts that have hit the poorest areas hardest.

“Tory cuts mean councils have lost 60p out of every £1 that the last Labour government was spending on local government.”

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