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Council revenues are likely to slump by significantly more than the £4bn identified by the LGA this week, Smith Square has warned. Mark Luntley, LGA finance programme director, said while official income estimates published on 10 August laid bare councils' bleak financial position during the recession, the study did not reveal the full impact of the downturn. LGA researchers this week estimated councils had been hit by a £4bn deficit in income over the past two years. But the study only revealed estimates for declining revenues from the sale of land and buildings – down by £2.7bn since 2007/08 – and interest earned on councils' cash deposits – down by £1.3bn due to low interest rates. Mr Luntley acknowledged the estimates did not yet include declining revenues across other key sources of town hall income, including property searches, parking and receipts from leisure facilities. ‘In addition to the falls in investment income and capital receipts, councils are facing steep falls in other day-to-day sources of income,' Mr Luntley told The MJ. ‘Budgets for property search income are 48% down on the previous year, while councils are expecting planning fees and building control income to fall by 11% and 14% respectively. ‘Other significant income budgets, such as car parking, are also under pressure, 6% down against the previous year.' When finalised, those decreases are likely to run into hundreds of millions of pounds on top of the £4bn announced this week. Mr Luntley said another reason Smith Square did not include other revenue streams alongside this week's estimates was because some income sources might have increased and have yet to be fully calculated. ‘Some council budgets are showing increases year-on-year, for example, in adult social care. But that doesn't mean councils are financially better off, it's a reflection of rising demands on social services as the population gets older, and more people need council care,' he said. Sir Jeremy Beecham, LGA vice chair, said councils had been hit by ‘the perfect storm' caused by the recession. ‘Sources of income have dropped sharply at a time when more and more people are turning to councils to help them through tough times,' he said.

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FINANCE

Slump in revenues 'will exceed £4bn'

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