Local Authorities Living Within Their Means

November 20, 2014 4:22 PM

There is a theory that a problem expands in proportion to the time that is dedicated to it. Public spending is often like this. The attitude of “something must be done” only leads to an escalation of spending such that when the money runs out, everyone suddenly wonders how things worked beforehand.

So a report from the National Audit Office has brought welcome news that local authorities have successfully managed their finances despite an estimated 37 per cent real-terms reduction in Government funding. And 80 per cent of single-tier and county councils added to their total financial reserves between 2010-11 and 2013-14.

There is concern about the financial resilience of some metropolitan districts in particular, which have to make unplanned service cuts. However it is noticeable that the government funding shortfalls have generally not spurred an increase in local revenue generation and it would be fair to assume that metropolitan areas would be best placed to do so.

The NAO report shows that local authorities have effectively focused on operating services which they presumably believe to be of particular importance. For example, adult social care has seen relatively little reduction in spending, but spending on traffic management fell by 43 per cent. It is excellent news that many councils have focused on ‘core’ service offerings, and it demonstrates good management. In business terms, there has been a process of rationalisation which helps to avoid organisational bloat. When every penny really counts taxpayers receive the greatest value for money.

However, this is an approach that should be constantly undertaken and it is worrying that spending reductions through efficiencies (rather than service reductions) lessened over the period in the only area that such data is collected (Adult Social Care).

Overall it is heartening that local authorities have “managed their finances successfully through a long period of funding reductions”. Perhaps the era of living within our means can continue.

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