LGA report shows tough spending choices for councils can’t be shirked

June 27, 2012 2:38 PM

Yesterday, the Local Government Association (LGA) published a report which modelled the funding outlook for councils until 2019-20. It is, in a word, grim. Councils’ income is projected to gently slide from around £50 billion last year to around £40 billion in 2019-20. Meanwhile, net expenditure is projected to rise from around £50 billion to almost £60 billion, based on estimates of demographic changes and their impact on local authorities’ statutory requirements to provide certain services. Clearly, such a large deficit is unsustainable and the LGA is right to raise the issue for public debate.

The LGA also highlight the fact that services most likely to be cut are those which are the most widely used. Social care spending represents a very large slice of local government spending and is largely determined by law and therefore, because of expected changes in the population, is likely to grow substantially. But few people use it. By contrast, leisure and recreation spending is largely discretionary but used by a much greater proportion of the population. The implication is that the coming squeeze in local government is going to be disproportionately unpopular.

What should be done? One option should be dismissed immediately: tax hikes. The British economy is already enfeebled by an onerous tax burden and people simply won’t put up with paying more. But other options exist to balance the books in town halls.

  • Trimming back services. Local authorities should look at how widely they need to provide services and much they can save by being more selective about the extent of the services they provide.



  • Transferring to voluntary and private sectors. What services do the private and voluntary sectors already provide? Is the local authority doing anything beyond muscling out these competitors with taxpayers’ money? An obvious example of competing with the private sector is an internet café in a library.



  • Re-configuring provision. Services don’t have to be provided in the existing way just because they always have been. Many councils have joined services to provide them jointly, reducing overlapping services and cutting overheads.



  • Examine legal requirements closely. Although the LGA are right to point out how much local authority spending is laid down by law, many councils ‘gold plate’ the requirements and spend more than is legally necessary. A legal requirement for a council to give consideration to a subject does not mean it has to create a whole department with managers, officers, co-ordinators and facilitators.



  • Cutting waste further. TaxPayers’ Alliance research has shown local authority spending on senior staff jump up year after year after year. We have also uncovered unnecessary spending on flights, awards ceremonies and council non-jobs. While some councils are making good progress on cutting waste, many still retain an easy spending culture which needs to be challenged.


The Government should also press ahead with its localism agenda and scale back the 1,300 statutory duties it places on local government. But while taxes should not rise, they too should be localised. The 2020 Tax Commission maps out how a series of taxes could be transferred from a national level to local councils, boosting competition and accountability. Some councils are bound to make foolish decisions when spending and tax decision-making powers are devolved to them but the status quo is not sustainable and, on average, more would make decisions that better reflect local priorities than now. The international evidence is overwhelming: more localised decision-making means better services and lower costs.

Tough decisions about council spending will be required over the coming years. The reality is that the scale of town hall’s ambitions must shrink down to what local taxpayers can afford. But councils shouldn’t make that any worse than it has to be by wasting money on outdated practices, unnecessary jobs and high pay and perks for senior staff.Yesterday, the Local Government Association (LGA) published a report which modelled the funding outlook for councils until 2019-20. It is, in a word, grim. Councils’ income is projected to gently slide from around £50 billion last year to around £40 billion in 2019-20. Meanwhile, net expenditure is projected to rise from around £50 billion to almost £60 billion, based on estimates of demographic changes and their impact on local authorities’ statutory requirements to provide certain services. Clearly, such a large deficit is unsustainable and the LGA is right to raise the issue for public debate.

The LGA also highlight the fact that services most likely to be cut are those which are the most widely used. Social care spending represents a very large slice of local government spending and is largely determined by law and therefore, because of expected changes in the population, is likely to grow substantially. But few people use it. By contrast, leisure and recreation spending is largely discretionary but used by a much greater proportion of the population. The implication is that the coming squeeze in local government is going to be disproportionately unpopular.

What should be done? One option should be dismissed immediately: tax hikes. The British economy is already enfeebled by an onerous tax burden and people simply won’t put up with paying more. But other options exist to balance the books in town halls.

  • Trimming back services. Local authorities should look at how widely they need to provide services and much they can save by being more selective about the extent of the services they provide.



  • Transferring to voluntary and private sectors. What services do the private and voluntary sectors already provide? Is the local authority doing anything beyond muscling out these competitors with taxpayers’ money? An obvious example of competing with the private sector is an internet café in a library.



  • Re-configuring provision. Services don’t have to be provided in the existing way just because they always have been. Many councils have joined services to provide them jointly, reducing overlapping services and cutting overheads.



  • Examine legal requirements closely. Although the LGA are right to point out how much local authority spending is laid down by law, many councils ‘gold plate’ the requirements and spend more than is legally necessary. A legal requirement for a council to give consideration to a subject does not mean it has to create a whole department with managers, officers, co-ordinators and facilitators.



  • Cutting waste further. TaxPayers’ Alliance research has shown local authority spending on senior staff jump up year after year after year. We have also uncovered unnecessary spending on flights, awards ceremonies and council non-jobs. While some councils are making good progress on cutting waste, many still retain an easy spending culture which needs to be challenged.


The Government should also press ahead with its localism agenda and scale back the 1,300 statutory duties it places on local government. But while taxes should not rise, they too should be localised. The 2020 Tax Commission maps out how a series of taxes could be transferred from a national level to local councils, boosting competition and accountability. Some councils are bound to make foolish decisions when spending and tax decision-making powers are devolved to them but the status quo is not sustainable and, on average, more would make decisions that better reflect local priorities than now. The international evidence is overwhelming: more localised decision-making means better services and lower costs.

Tough decisions about council spending will be required over the coming years. The reality is that the scale of town hall’s ambitions must shrink down to what local taxpayers can afford. But councils shouldn’t make that any worse than it has to be by wasting money on outdated practices, unnecessary jobs and high pay and perks for senior staff.

Latest Blogs: