Government has no plan to secure financial future of councils

Prestigious House of Commons Committee sounds alarm bells over future of local authority funding Member of the Public Accounts Committee, Stephen Morgan MP, has joined colleagues on his select committee in warning that the Government have no plan for the future funding of councils.Parliament’s oldest committee has said that, after seven years of government funding reductions totalling nearly 50 per cent and rising demand for services, local authorities are under real strain.Key services that support vulnerable people, such as social care and housing, are now under enormous pressure. Other important local services in areas such as planning, transport, and cultural services have seen spending cut by between a third and a half.Local authorities face an estimated funding gap of over £5 billion by the end of the decade.The PAC warns the Ministry of Housing, Communities and Local Government (the Department) has not yet developed a plan to secure their long-term financial future. It is not transparent enough about its understanding of the pressures faced by local authorities, meaning Parliament and the taxpayer cannot be sure that it genuinely understands or is addressing the issue.The Department has been criticised as overly reliant on a favourable outcome from the 2019 Spending Review to address authorities’ financial issues. There are fears this is particularly complacent given that the previous Spending Review settlement resulted in many local authorities having to rely on reserves to fill the gaps in funding.The recent announcement about additional money for the NHS did not include anything for social care. Given that social care is the other half of the equation, it is vital that there is a long-term solution.Stephen Morgan MP, said:“It’s deeply irresponsible for the Tories to remain so complacent on the funding of our local councils. The Government’s approach is unsustainable and blasé. They’ve so far failed to take seriously the incredibly important financial pressures faced by councils, and it is local people and services that are bearing the cost, with local authority spending power down by over a quarter. In Portsmouth, we’ve seen funding cut at a time when demand is rising. Our city has lost out on £73,000,000 in investment and resources for local services. This is putting unacceptable pressure on invaluable services and the people who provide and rely on them. Councils shouldn’t have to burn through their reserves just to stay afloat. The Government must urgently address this looming crisis because, as our report makes clear, there’s only so much more local authorities can take.” PAC Chair, Meg Hillier MP, said: “It is no secret that councils are under the cosh. The mystery is how central government expects their finances to improve when it has such an apparently shaky grasp of the issues. It beggars belief that the Department responsible for the local government financial framework, and which takes the lead in assessing councils’ funding requirements, has neither an agreed measure of sustainability nor a clear definition of ‘unsustainable”.