The deteriorating state of the UK's public finances could threaten town hall moves to settle equal-pay claims, national statisticians warned this week. Nigel Louth, public sector finance expert at the Office for National Statistics, told The MJ the economic slowdown laid bare by ONS figures last week could challenge local authorities in two ways. ‘The two areas of immediate concern during this period are likely to be ongoing town hall moves to settle equal-pay claims, and what would happen if Unison is successful in its campaign to improve this year's pay deal for council staff,' Louth said. ‘Beyond that, it is still too early to tell what the overall impact [of the credit crunch] will be on local government, other than to note that it faces the same, tougher conditions as the rest of the UK.' ONS figures published on 19 July showed that net UK public sector borrowing was £24.4bn during the first quarter of 2008/09 – the highest recorded quarterly borrowing figure since records began – and £9.7bn more than the same period last year. The state of the UK's finances has left prime minister Gordon Brown's ‘sustainable investment rule', which limits annual borrowing to 40% of UK GDP, under threat. Unlike the rest of the public sector, local government's position at the beginning of the financial year was healthy – a consequence of the annual surge in council tax revenues and central government grant receipts throughout the period. Local government contributed almost £3bn in net revenues from April to June, but is still expected to borrow around £1.1bn throughout 2008/09. That is still less than the £2.6bn borrowed in 2007/08, although revisions to this year's figures could be published alongside the Pre-Budget Report this autumn.
