The Public Accounts Committee 3rd Report of this Session examines the financial sustainability of local authorities
This report examines the financial sustainability of local authorities (LA’s) at a time when they are half way through a period of significant funding reductions.
- Central government grant funding to local authorities is being cut by over a quarter in real terms (£7.6 billion) between 2011 and 2015.
- The Department for Communities and Local Government is reforming the business rates and council tax benefits.
The report suggests that the Department for Communities and Local Government does not properly understand the overall impact on local services that will result from the funding reductions. For example money voted by Parliament to LA’s may not be used for its intended purpose. The Department also did not do enough work with other government departments to model how funding changes may adversely affect other areas of the public sector, for example cuts in local authority adult social care could lead to bed blocking in hospitals.
The level of funding reductions also varies from council to council. Reductions can be between 1% and 9%. As a result the worst-affected councils may be unable to meet their statutory obligations and serious questions will arise about the viability of some of them.
“The Department does not have a clear strategy for responding to and dealing with such failures. The Department urgently needs to engage with other government departments and the local government sector on what the financial pressures mean for the future shape of local authority services. It must also overhaul its accountability arrangements and in particular clarify its plans to respond if councils become unviable.”
You can view the report on the Parliament website.