Majority of councils ‘will need to increase charges to make ends meet’

By The Press Association18th February 2016News EnglandBusiness / Funding / Finance, Finance, Local Authorities, News England

Council finances are in a “mess” and the vast majority have said they will need to increase charges for services to make ends meet in the face of a Government funding cut of 28%, a think-tank has said.

As councils finalise their 2016/17 budgets, nearly 90% said they will have to increase charges, according to a survey by the Local Government Information Unit (LGiU).

The think-tank also found that 40% would need to cut frontline services that are “evident to the public”.

The Local Government Association said core Government funding to councils known as the Revenue Support Grant (RSG) would be cut by 28% (£2.7 billion) in 2016/17.

Nine in 10 councils will raise council tax in the coming year, compared with half in 2015, while almost all councils are expected to take advantage of the 2% social care precept, although three-quarters feel it would not be enough to close the funding gap in adult social care.

In addition, 82% of councils said they will have to dip into reserves to balance the books, up from 55% in 2015.

As the central government grant is phased out, six in 10 councils said they could become financially self-sufficient by 2020.

Jonathan Carr-West, chief executive of LGiU, said: “Local government finance is a mess. Our research shows that right now councils are cobbling together their finances by using reserves and increasing charging wherever they can.

“The Government has shown a genuine and radical commitment to changing the way Britain is governed. But the path to devolution has been encumbered by decades of central government ducking crucial questions about how local government is financed.

“The system we have now is one which no-one would design. Central government and local authorities both want to see a sustainable independent funding model. But until we answer fundamental questions about how to make this work, devolution will be a process rather than a revolution.”

Communities Secretary Greg Clark defended the funding deal for local authorities.

He said: “This historic four-year funding settlement means nearly two thirds of councils are confident they will be financed independently of central government within five years – something local government has campaigned for over decades.

“There is a clear appetite for greater devolution of powers from Whitehall to town halls, which we’re doing through ground-breaking devolution deals across the country, and our plans for radical reform of business rates.

“All this will ensure councils will be able to continue delivering the services their residents value, while at the same time keeping council tax bills down.”