Sustainable local government finance and liveable local areas: Can we survive to 2020?
Commissioned by: The Association for Public Service Excellence (APSE)
This report paints a picture of local government finance up until 2020 against the backdrop of the past five years and identifies the challenge it presents to the liveability and public realm services most closely associated with APSE. They include local government functions such as waste, recycling, streetscene, leisure, parks, recreation, environmental health, roads and street lighting upon which everyone who lives or works in an area depends.
1. Current spending by UK local government is now below the previous post-1979 low point. By 2020, current and capital spending combined will be lower than at any time since before 1948. Already in uncharted water, many of the things which English local authorities have taken for granted for decades will have gone by the end of this one.
2. Council tax, until recently a minority source of local government finance, will account for at least half the money coming in to every kind of English local authority by 2020. For shire counties, it will account for three quarters.
3. By 2020, revenue support grant, at barely a third of its current, already much reduced level will be mainly confined to metropolitan and unitary districts and London boroughs. Shire counties (94% on average) and districts (85%) will be almost entirely reliant on council tax and business rates.
4. The more deprived a local area, the harsher have the past five years’ funding cuts been. The extra funding for more deprived authorities won’t come down much further by 2020. But a new dimension of inequality is opening up according to how strongly an authority can grow its business rate income. There is no link between the two: business rates are not a general answer to local deprivation.
5. A shrunken revenue support grant signifies the end of the only general mechanism for providing resources to English local authorities in response to local need.
6. Although the headline fall in core spending power between now and 2020 is just 0.5%, the additional pressure on English local authorities over that period is estimated to be about 10%. If all of that pressure is borne by services other than social care, the pressure on those services approaches 20%.
7. By 2020, the extra council tax that can be levied for adult social care – the social care precept – will come close to covering the growth between now and then in the direct cost of providing that care. The idea behind the “jaws of doom”, that other local government services are caught in a pincer movement between falling grant and rising care costs, has lost its force at the aggregate level. It still carries weight in some local authority areas where the disparity between the funds that can be raised through council tax and the demand growth for social care is greatest. Meanwhile, an ageing population will put additional pressure on liveability and public realm services. These indirect costs are not currently being met by new sources of funding.