LGIU Response: Budget 2023
Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU) said:
“There was some good news for localists in today’s budget. Multi-year finance settlements and a single budget for Greater Manchester and the West Midlands is a positive step and one that we have long called for at LGIU. We should note though, that this budget only covers devolved policy areas, so large elements of public service spending are left outside it.
“There will be few tears shed in the sector over the demise of LEPs. Local government is more democratically accountable and better positioned to drive strategic economic development and to facilitate the necessary local partnerships.
“Three quarters of councils in our recent State of Local Government Finance report called for a 100% business rate retention and will be pleased to see the Chancellor confirming his intention to introduce this.
“But while we should welcome moves to localise growth and empower local leaders, other aspects of the budget appear to confirm the Government’s unfortunate tendency to command and control.
“More competitive bid funding in the Levelling Up Fund, investment zones to be decided on by central government, even the £63 million on swimming pools will be within the Government’s gift.
“On top of which we see reports that the Mayor’s in West Midlands and Greater Manchester will now be subject to scrutiny from committees of MPs. This is a move in the wrong direction when we should instead be strengthening their accountability to local people, not Westminster.
“Overall this feels like a budget of a government that recognises the importance of local leadership but just can’t bear to let go.”
Notes to editors
The LGIU conducted the 2023 State of Local Government Finance survey from 9 February – 23 February 2023 and received 160 responses. Responses were collected from Chief Executives, Council Leaders, Directors of Finance and Cabinet Members for Finance across 138 Councils in England. We received responses from a broad cross-section of councils, encompassing county, district and unitary authorities, a mixture of political control, and all regions. 2020 was the last time this survey of councils in England was carried out. Prior to that, It was conducted annually since 2012.
-Council finances are in a critical state and there is widespread concern among senior council figures about their long and short-term resilience. Only 14% of senior council figures have confidence in the sustainability of council finances.
-Councils are taking every step available to them to balance their budgets. More than 50% of respondents said they would be cutting spending on services, increasing commercial investments, or spending reserves. More than 90% said they would be increasing council tax – most often by the maximum amount possible – or increasing fees and charges. 88% said they had to take three or more of these measures.
-Adult social care, housing and homelessness and children’s services were the greatest pressures on council finances. Of these, adult social care was the most frequently cited long-term pressure and housing and homelessness most often chosen as a short-term pressure.
-72% of respondents said their council had dipped into their reserves last year, and 68% plan to this year. This means that 54% of all respondents were in a council that was spending reserves both last year and this coming year – a completely unsustainable situation.
-52% of respondents said their council would be cutting spending on services. 20% went further, and said their budget would lead to cuts in frontline services that would be evident to the public. Even more urgently, 7.5% – 12 different councils – said there was a danger that financial constraints could risk their capacity to deliver their statutory duties – the essential services they are legally required to provide.
-Very few respondents supported the central government’s approach to local government finance. Only 5% were happy with the progress that has been made on delivering a sustainable finance system, and only 8% felt confident that the government would prioritise considering councils in wider policy decisions.
-The process of bidding for central government funding was widely regarded as an ineffective way to distribute funds, and a serious waste of time and resources for councils. 82.5% of all respondents said their council had made at least one unsuccessful bid, and 21% that all of their bids had been rejected.
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