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Strictly embargoed until: 00:01 Thursday 19 February, 2015
Nine out of ten councils say local government finance is not fit for purpose
Over half forced to dip into reserves to make ends meet
New research out today reveals that the majority of Councils feel the local government finance system is not fit for purpose, unpredictable and outside their control.
The survey (carried out by the LGiU and MJ) found that over half of councils feel they will not have enough funding in 2015/2016 to fulfil their statutory duties because of financial constraints.
Over 80 per cent say they will have to increase charging for services to balance their 2015/ 2016 budgets. Significant proportions are also making plans to charge for new services like public parking and toilets and green waste.
Half of the Councils surveyed plan to increase council tax above the 1% deal offered by the Government while 55 per cent may be forced to dip into reserves to make ends meet.
The findings also identified possible improvements that could be made to the system. The majority of those surveyed support scrapping the Barnett formula while 82 per cent think council tax should be completely re-evaluated by the next Government.
Increasing business rate retention was seen as a silver bullet with 76 per cent saying the measures would allow them to become financially sustainable. Other measures that Councils felt would help them become self-sufficient included: single local budgets, tourism taxes and un-ring-fencing the housing revenue account.
Jonathan Carr-West, Chief Executive of LGiU, said: “Councils across the country are telling us that the local government finance system is broken. We know they are struggling to make ends meet as they balance their budgets for next year in a system that is out-dated and not fit for purpose.
Removing the bureaucracy and control of central government and giving councils control over their own financial destiny is the only solution.’
Heather Jameson, Editor of The MJ, said: “The local government funding system is beyond broken and with the twin pressures of cuts and increasing demand councils are getting dangerously close to collapse.
If we want local services that are fit for purpose and affordable, we need an urgent overhaul of the local government finance system – and of the way local public services work together.”
Notes to editors
- The LGiU and MJ conducted the survey jointly in February 2015.
- Responses were collected from Chief Executives, Council Leaders, Directors of Finance and Cabinet Members for Finance across 90 Councils in England.
- Please note that survey data should be credited to the LGiU & the MJ.
The Local Government Information Unit (LGiU) is a think tank and membership body with 200 councils subscribing to our networks. We work to strengthen local democracy and put citizens in control of their own lives, communities and local services. For more information, visit lgiu.org.
About The MJ
The MJ is the UK’s leading weekly magazine for council chief executives and senior managers in local authorities and allied sectors. It offers an insiders’ view of what’s going on and what people are thinking in today’s ever changing and challenging world of local politics – the latest news, incisive comment in-depth features and interviews, business analysis and the top recruitment vacancies