The cut
“Councils will face an average loss of grant of 7.25 per cent, in real terms, in each of the next four years. However, this will be accompanied by new financial freedoms and flexibility.”
Secretary of State for Communities and Local Government, Eric Pickles, letter to council leaders 20 October 2010
The background
27-28 per cent cuts over 4 years in central government grants to councils have been announced – which equals huge chunks of local authority budgets. And all of this in the face of a government funded council tax freeze.
So how will they do it? CutsCheck has had exclusive access to a survey by the Local Government Information Unit which reveals what councils are planning to do to make their books balance.
The analysis
LGIU asked councils if they have plans in place to deal with reduced budgets – nearly all (92.1%), said they had fully worked plans, or they’d already begun implementing their plans. The Eric Pickles preferred method of savings – sharing services – seems to be a hit. An overwhelming 95% of council leaders said they planned to share services – something we looked at last week on FactCheck.
There seems to be an increase in interest in contracting out to other providers – 46% of council leaders said they would use or consider contracting out more to the private sector, and 53% of leaders say they plan to use charities to provide services, to help them save money. This could be welcome news for businesses and voluntary groups worried about shrinking public sector contracts.
Three quarters said they planned to change working practices and make organisational changes. And authorities seem pretty signed up to the Prime Minister’s Big Society project: two thirds said they wanted to use greater community engagement to help balance the books.
44% of council leaders thought they could make all these savings without any reductions in the level of services. It sounds optimistic – but it could be good news for council tax payers.
Local government expert Tony Travers from the LSE thinks the survey shows councils are genuinely trying to approach the cuts round rationally instead of making random cuts, so called ‘salami slicing’. He told CutsCheck: “There does seem to be a commitment to protect services. The very powerful message we’re getting from this is that local government wants to approach this rationally.
“The question is, can this rationality survive when the cuts begin to be implemented next April?”
When we rang round some council leaders last week, there was certainly evidence of creative thinking going on in England’s town halls. One council’s looking at using smart cards to find out which of its youth services are most used so it can then direct funding to where it’s needed. It’s also looking at charging means-tested amounts for currently free services like pest control.
But for all of the cautious optimism about protecting services, local government is looking at an Herculean task. One dismayed leader of a London borough told us the cuts had been much worse than he was expecting and that his council’s budget will be cut to what it was in the early ’90s.
The verdict
There is no doubt council leaders are prepared for a big drop in budgets. But the LGIU research does suggest that – if their plans work – the impact for service users might not be as bad as feared. Come April, and the beginning of the next financial year, we’ll see if their optimism was justified.
