Funding for Councils Is Slashed by a Quarter

Article excerpt


COUNCIL funding is to be slashed by more than a quarter - prompting fears of a cash crisis which could see the closure of libraries and leisure centres alongside a raft of new charges.

Local Government Secretary Eric Pickles said town halls would be given new freedoms over the way they spend their money in an attempt to reduce the impact of the cuts.

Dozens of strict central controls will be scrapped, allowing councils to be 'innovative' and cull thousands of so-called 'non jobs' but the news was accompanied by a 26 per cent cut in grants, Local authorities that try to push up council tax to cover costs will be forced to hold a referendum if they propose excessive rises.

And many believe this will force them to either slash jobs or start charging for previously free services.

Analysts last night suggested so-called discretionary services such as libraries, swimming pools, street cleaning and meals-onwheels would face a severe squeeze.

There could also be higher parking fees and 'queue jumping' charges for those who want swifter decisions on planning.

Councils have, however, been offered [pounds sterling]650million to pay for a freeze in council tax bills in England next year. This would be worth up to [pounds sterling]70 for an average Band D home, although the Government plans assume council tax will rise by 2 to 3 per cent in the coming years.

Sources said the small increases meant that overall council budgets would still fall by 14 per cent overall. Council tax benefit will also be cut by 10 per cent, with local authorities given responsibility for deciding how to implement it. Margaret Eaton, of the Local Government Association, said: 'Town halls will now face extremely tough choices about which services they can keep on running.' Consultants Pricewaterhouse-Coopers said local councils would account for up to half the 500,000 public sector jobs expected to go as a result of the spending review.

Birmingham City Council has already issued voluntary redundancy notices to half of its staff. Chris Buttress, of PwC, said councils faced a 'perfect storm' and would have to 'fundamentally look at what they do'.

And fellow consultants KPMG said some struggling councils could even go bust - forcing the state to step in. Analyst Iain Hasb del said: 'I am expecting this challenge to be beyond some councils, which will run out of cash at some point in the next four years.' But Government sources said councils had plenty of scope to cut waste, including axing thousands of posts for 'non-jobs' like diversity officers, European Union liaison staff and climate change advisers.

Tony Travers, of the London School of Economics, said councils would cut non-essential services and look to increase charges. …