Almost 60p in every £1 that people pay in council tax may have to be spent caring for children and adults by 2020, leaving increasingly less to fund other services, like fixing potholes, cleaning streets and running leisure centres and libraries.
New analysis by the Local Government Association, published ahead of the Autumn Budget, illustrates the strain being placed on council budgets as a result of the rising demand for adult social care and children’s services.
For every £1 of council tax collected by councils in 2019/20, the LGA forecasts that 56p will be spent on caring for the elderly, vulnerable adults and children. This is up from 41p in 2010/11.
As a result of the pressures on adult social care and children’s services, less funding will be available to be spent on other vital services. For example, 6p in every £1 of council tax by 2020 could be spent on collecting bins and recycling, 5p in every £1 on improving roads and street-lighting, 2p in every £1 on bus services and just over 1p in every £1 on trading standards, licensing and food safety.
The LGA is warning that the money local government has to provide vital day-to-day local services is running out fast.
By 2020, local government in England will have lost 75 pence out of every £1 of Revenue Support Grant funding that it received from government to spend in 2015. Almost half of all councils – 168 councils – will no longer receive any of this core central government funding by 2019/20.
Government plans to allow local government as a whole to keep all of its business rates income by the end of the decade are in doubt after the Local Government Finance Bill, which was passing through parliament before the election, was not reintroduced in the Queen’s Speech.
The LGA says this has led to real and growing uncertainty about how local services are going to be funded beyond 2020.
As part of its Autumn Budget submission, the LGA said local government must first and foremost be allowed to keep all of the business rates it collects locally each year to plug growing funding gaps. A fairer system of distributing funding between councils is also needed.
However, councils are clear that keeping more business rates income on its own will not be enough to sustainably fund local services in the long-term. The LGA said the Government needs to set out how it intends to further fund councils to meet future inflation and demand for services, such as social care and homelessness, into the next decade and beyond.
Cllr Claire Kober, Chair of the LGA’s Resources Board, said:
“Demand for services caring for adults and children continues to rise but core funding from central government to councils continues to go down. This means councils have no choice but to squeeze budgets from other services, such as roads, street lighting and bus services to cope.
“Within two years, more than half of the council tax everyone pays may have to be spent on adult social care and children’s services. Councils will be asking people to pay similar levels of council tax while at the same time, warning communities that the quality and quantity of services they enjoy could drop.
“Local government in England faces a £5.8 billion funding gap by 2020. Even if councils stopped filling potholes, maintaining parks and open spaces, closed all children’s centres, libraries, museums, leisure centres, turned off every street light and shut all discretionary bus routes they still would not have saved enough money to plug this gap in just two years.
“An extra £1.3 billion is also needed right now just to stabilise the perilously fragile care provider market.
“The Government must recognise that councils cannot continue without sufficient and sustainable resources. Local government must be able to keep every penny of taxation raised locally to plug funding gaps and pay for the vital local services our communities rely on.
“With the right funding and powers, local government can play a vital role in supporting central government to deliver its ambitions for everyone in our country.”