“Town halls face significant challenges as they try and set budgets this year and some councils continue to be pushed perilously close to the financial edge.”
If you wanted any statement to sum up local government’s sense of financial crisis, that statement from Lord Porter, the chairman of the sector’s leadership organisation, the Local Government Association (LGA), would surely be hard to beat.
Even worse: councils face an overall £5.8bn funding gap in just two years, claims the LGA.
Responding to the final Local Government Finance Settlement published yesterday, for Porter, “Councils in England face an overall funding gap that will exceed £5bn by 2020. We remain clear that the Government needs to allow local government to keep every penny of business rates collected to plug this growing funding gap and provide the £1.3bn needed right now to stabilise the care provider market.
The on-going squeeze on local government’s capacity to buy goods and services will worry IT suppliers, as well as other vendors, looking to win business.
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While the majority of councils are reported to be looking at raising council tax in April, that still only accounts for 15% of local authority income – prompting the LGA to add that, “Extra council tax raising powers will helpfully give some councils the option to raise some extra income, but will not bring in enough to completely ease the financial pressure they face. This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.
“Councils are the ones who can make a difference to people’s lives by building desperately-needed homes, creating jobs and school places, providing dignified care for our elderly and disabled, boosting economic growth, cleaning streets and fixing potholes. But the money local government has to maintain these vital services is running out fast.
“Only with the right funding and powers, can councils continue to lead their local areas, improve residents’ lives, reduce demand for services and save money for the taxpayer.”
The government states that the funding settlement for English local authorities will see a real terms increase in available resources over the next two years and give them access to over £200bn from 2015 to 2020 to “deliver the high-quality services their local communities need”.