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Three-quarters of councils have had to revise their budgets after the amount of cash they collected has dropped due to the recession. According to a survey by the Local Government Association and SOLACE, councils are being hit by a ‘double whammy' of lower income and higher demand for services, such as free school meals. Despite local government minister John Healey's calls before the downturn for councils to make more money for themselves by charging and trading, councils have seen an 83% drop in revenue from this source. And, as interest rates crash, council savings are earning less cash in interest than expected. A downturn in the property markets has hit Section 106 agreements, capital receipts and land registry fees. LGA chairman, Margaret Eaton, said that, despite the squeeze, ‘councils are facing tough times, but are determined to deliver for local people'. ‘It is clear that a national, one-size-fits-all approach to dealing with the recession simply isn't going to work. The fastest way to get out of recession is for more decisions about the economy to be taken at a local level, which means councils continuing to work with local people and businesses.' The recession is more likely to be like a ‘Nike "swoosh"' than an L or U-shaped one, according to local government minister, John Healey. Writing in the latest pamphlet released from the LGA Labour group, Mr Healey said: ‘I expect it to be similar to the early 1990s, with jobs being lost rapidly now, then being regained more slowly.' Leading the way: Labour local government's response to the credit crunch is available from the LGA Labour group from January. Reasons councils have revised budgets 83% of councils seeing a drop in income from fees and charges such as planning applications 66% of councils seeing a drop in the interest they receive on deposits 66% of councils seeing a drop in money received from the sale of assets such as land and buildings 39% of councils seeing a drop in expected income from Section 106 agreements 26% of councils seeing an increase in demand for services such as free school meals 24% of councils seeing a drop in income from council tax and rent collection.

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WHITEHALL

Survey shows full cost of the crunch

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