The State of Local Government Finance: Project Launch
What does English local government finance look like in 2023? Our new survey, launched this week, asks council leaders, chief executives, cabinet members and lead finance officers across England to find out.
Since 2012 the LGIU has sought to capture the thinking of those responsible for council finances in the run-up to when they set their annual budgets in early March. In previous years the survey has offered us insights into the state of local government finances across England by providing a unique look into the perspectives of the senior executives responsible. In this blog I’ll examine what previous finance surveys have taught us and what we hope to learn in 2023.
Previous Finance Surveys
Looking back over the years, it is first noticeable how the state of local government finance, which may feel as though it has been in the same perpetually difficult position, has changed over the last decade. The graph below shows how the council tax freeze scheme under the coalition government has given way to year-on-year council tax increases across nearly every council.
Based on what we know about council tax from other research, the high proportion of councils raising the tax will continue this year. In the 2023 survey we will ask this question again, as well as capturing the other ways councils will seek to raise funds (commercial activity, increase borrowing) or reduce spending as local authorities attempt to balance their books for another difficult financial year.
Secondly, the surveys, by collecting data from across England, have also allowed us to draw conclusions that would otherwise be very difficult to see. For example, here are the respondents who say that their current budget will lead to frontline cuts that will be visible to the public from 2017-2020:
This looks promising, as though no more than 50% of respondents have ever considered that budget cuts would be visible to the public, and are becoming less visible as time goes by. However, if we disaggregate between lower and upper tier authorities, the picture changes. Respondents from upper-tier authorities were significantly more likely to agree that cuts they made in their services would be visible to the public. In some years, over 70% of respondents from upper-tier authorities thought that the public would be able to see these cuts.
Finally, the survey provides a source of evidence different from spending figures or account balances. It gives us an opportunity to see how local government finance looks from the inside. This is nowhere more apparent than the answer to our most important question each year: “How confident do you feel about the sustainability of local government finance?”
In 2020 confidence in council finances reached its highest level, with 26% of respondents saying they were quite or very confident in its sustainability (the survey was sent out and closed in January before the impact of Covid 19). But again, even this low level of confidence obscures the more concerning picture. In the year 2017-2020, the years we have asked this question, only 4 respondents answered that they were “very confident.” Not 4%, just 4. It remains to be seen whether this trend will continue in 2023.
Why is 2023 different?
The 2023 survey is being launched in a very different world than our last survey at the start of 2020. Since then, the pandemic transformed many local services, the cost of living crisis has affected the lives of countless people, and we are on our third prime minister. It’s safe to say that the state of local government finance could be in a very different position to when we last conducted this research. Or, alternatively, it could be that the changes in the economy and national government have done little to alter the overall state of local government finances. This research will allow us to find out.
We are asking questions on several major topics, including:
- Confidence in the local finance system.
- Steps taken to balance the books this year.
- Options for fiscal devolution.
- Current affairs and their effect on local government finances.
- The bidding process for central government funds.
We will publicise our results in a major report at the start of March. This survey, and the report and events that will follow it, will play a major role in informing the wider public about the truth of local government finance from behind the scenes. The LGIU are for local government, and whatever the results of the 2023 survey we will make sure your opinions are heard.
Finally, we will perform similar studies in Scotland and Ireland later in the year, to better understand the picture of local government finance across the UK and internationally.
Make sure you register at LGIU so you don’t miss our findings, and if you have received this survey, please take the time to fill it out. The more responses we get, the better we can understand your views and shine a spotlight on local government finance. If you would like to learn more about the finance survey, please check our website or contact Greg Stride at greg.stride@lgiu.org.
