Councils face £1bn funding shortfall

Government spending plans outlined recently show a £1bn shortfall up to 2016 in the amount councils had anticipated receiving under plans outlined by the Chancellor in June’s spending review.

The Spending Round funding reduction to local government was calculated at 10 per cent, but the new figures, included in a consultation from the Department for Communities and Local Government (DCLG), suggest real-terms cuts to council budgets of 15 per cent.

One council has already calculated that the change will see the amount it needs to save over the next five years soar by an extra £30m.

The Local Government Association (LGA) has written a briefing outlining the changes and why they have only now come to light. Local government thought that money allocated for specific programmes including the Troubled Families initiative, new social care burdens and Independent Living Fund was in addition to the local government budget totals in 2014/15 and 2015/16, when in fact some of it was included in the amounts outlined in the Spending Round.

While the LGA has calculated that the changes will see an additional five per cent real-terms reduction in the total local government budget, it points out that councils who won’t receive funding for any of the specific programmes will be hardest hit.

The DCLG consultation runs until October, and councils are still analysing the impact that the latest blow to their coffers will have on specific departments, but it seems likely that no services will be left unaffected. Services funded through councils’ general budgets such as children’s centres, youth support and leisure facilities are most vulnerable to the axe.

Derbyshire County Council said the amount it will need to save over the next five years as a result of the revised figures will rise from £127m to £157m.

The council’s leader Anne Western said: “We provide a trusted lifeline for thousands of vulnerable people. The government is making it almost impossible for councils to deliver even a basic level of service.”