Magazine article Public Finance

That Sinking Feeling

Magazine article Public Finance

That Sinking Feeling

Article excerpt

local government faces unprecedented financial challenges. We are, at best, halfway through the longest period of austerity the country has ever known with a future of continuing constraint to follow. At the same time as downward pressures on budgets and local taxes, there are upward pressures on services. Against this background CIPFA, working with the Local Government Association, has launched the Independent Commission on Local Government Finance.

The reduction in government departments' spending limits will top 10% by 2015/16, yet the Institute for Fiscal Studies estimates that a further 7.9% cut will be required in 2016/17 and 2017/18 unless taxes increase or welfare expenditure is cut This has significant consequences for local government, which has not had the protection given to health or educatioa

In 2010/11, the last year before the austerity measures started in the 2010 Comprehensive Spending Review, total funding for local government was £50.8ba This is forecast to fall to £43.4bn by 2019/20, including £3.1 billion of additional funding from the transfer of public health responsibilities to local government

While localisation of business rates has a positive impact on resources, counter to this are rapidly declining levels of grant support and council tax income. The only relative winners are those authorities able to deliver growth in the tax base.

But there are service pressures to match sharply declining resources. The graph below shows the impact of pressures on social care and waste management on other budgets for the period to 2019/2020. These include: Adult Social Care: Demographic growth and increases in unit costs, based on modelling by the Dilnot report on paying for social care, lead to unavoidable cost pressures. The calculation takes account of funding under the Better Care Fund from 2015/16, but not any additional burdens arising from the Dilnot reforms. Children's Social Care: Changing child population in each local authority area and unit cost increases result in unavoidable growth in cash terms. This excludes additional costs forecast by the Children and Family Court Advisory and Support Service due to more councils applying for care orders since the Baby P case.

Waste services: Based on Defra's modelling that the total quantity of waste will decrease as the proportion turned into energy increases while that composted remains steady, management costs will remain broadly constant. …

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