EXCLUSIVE: ‘It’s make or break time’ - annual finance survey

By Dan Peters | 09 February 2017

Local government has reached ‘breaking point,’ according to an exclusive survey of key council decision-makers published today.

The results of The MJ and LGiU think-tank annual finance survey prompted chair of the Communities and Local Government Committee, Clive Betts, to warn financial failure of a council was ‘more likely’ this year.

Nearly eight out of 10 respondents to our survey – of more than 160 council chief executives, leaders, finance directors and portfolio holders from 131 local authorities across England – said they lacked confidence in the sustainability of the sector’s finances.

A lower but still significant 13% admitted there was a danger they would no longer have enough funding to fulfil their statutory duties in the coming year, with half of those based in the South East.

Reacting to the results, president of the Association of Local Authority Treasurers Societies, Duncan Whitfield, said the next two years would be ‘make or break for some of the more beleagured authorities’.

The findings come amid fears and uncertainty ahead of the move to 100% business rates retention, with nearly half of respondents predicting they would lose out from the move and senior sector figures warning other forms of fiscal devolution would be needed for local government to survive.

Mr Betts said: ‘I think 100% business rates retention is a very small step and it won’t deal with the underlying problems. The cobbling together will become more apparent. Other forms of fiscal devolution are needed.’

Despite Mr Betts’ call, just 39% of respondents said they wanted to be able to raise locally-specific taxes.

Professor of local politics, Colin Copus, said local government needed to have ‘more courage,’ adding: ‘I’m surprised there’s not more clamour for being able to raise more taxes locally.

‘As the Government steps away from funding local government, if that tax base isn’t expanded then things are going to get an awful lot worse.’

The survey also found an overwhelming 94% planning to increase council tax in 2017/18 and four out of five of those eligible said they were likely or very likely to take up all or some of increased social care precept.

This reflects mounting strains in adult social care, which four out of five top-tier respondents named as their greatest immediate pressure.

President of the Society of Local Authority Chief Executives, Jo Miller, said: ‘Those authorities that have responsibility for adult social care and children’s services are going to find it the hardest to be financially sustainable.

‘This survey presents a picture of great concern for the level of stress our public services face.

'It’s very alarming and ministers should take heed.’

Chief executive of the LGiU, Jonathan Carr-West, said: ‘Local government finances across the country are in a dire state. Increased demand coupled with the management of nearly a decade of cuts from the Government has left local government at breaking point.

‘Everyone is expecting someone to fail. They are just hoping it won’t be them.’

Chair of the Local Government Association’s resources board, Cllr Claire Kober, added: ‘This survey paints an alarming picture of the financial pressures facing councils and local services next year and beyond.

'We know that some councils are being pushed perilously close to the financial edge after years of funding cuts.’

Shadow communities secretary Teresa Pearce said the results of this year’s survey were ‘deeply depressing,’ adding: ‘Cuts to local government have decimated communities across the country.’

But a Department for Communities and Local Government spokesman said: ‘We have delivered what local authorities have been asking for, with four-year funding certainty, accepted by 97% of councils.

‘This means £200bn for councils to spend on the services that local people value, with an additional £7.6bn of social care funding available over the next four years.’

Visit here for a full analysis of the results. 

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