75p in every £1 of core government funding to councils cut by 2020

Securing the financial sustainability of councils and vital local services must be the top priority for the new government, the leader of local government in England will say today (4/7).

Lord Porter, Chairman of the Local Government Association, will use his keynote address to more than 1,200 local government leaders, councillors and ministers at the LGA’s Annual Conference in Birmingham today to demand that councils are at the “front of the queue” for new funding if “austerity is coming to an end”. 

The speech comes as councils face growing financial pressures and uncertainty.  

• By 2020, local government in England will have lost 75 pence out of every £1 of core central government funding that it had to spend in 2015 - this is money used to pay for services like collecting bins, filling potholes, protecting children and caring for elderly and disabled people.

• Almost half of all councils - 168 councils - will no longer receive any of this core central government funding by 2019/20.

• Councils face an overall £5.8 billion funding gap by 2020 - even if councils stopped filling in 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 by the end of the decade.

The LGA said the need for adequate funding for local government is urgent. To maximise the potential of local government and protect local services from further cuts, councils must also be made financially sustainable and fiscally independent by being able to keep every penny they raise locally in taxation to spend on local services. 

The LGA is therefore calling for: 

• Local government to be allowed to keep all of the £26 billion in business rates it collects locally each year – government plans for this to happen 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. A fairer system of distributing funding between councils is also needed.

• Council tax referendum limits should be abolished – councils have strived to keep council tax low. It should be for councils and their residents to decide how local services are paid for, not Whitehall. No other national tax subject to referenda.

The LGA is today launching a new report, Growing Places, which sets out how councils can - with fairer funding and freedom from central government - build desperately-needed affordable homes, create jobs and school places, provide the dignified care for our elderly and disabled and boost economic growth.

Lord Porter will say today:  

“The money local government has to provide vital day-to-day local services is running out fast. There is also now huge uncertainty about how local services are going to be funded beyond 2020.

“Councils can no longer be expected to run our vital local services on a shoestring. We must shout from the roof tops for local government to be put back on a sustainable financial footing.

“Every penny in local taxation collected locally must be kept by local government and spent on our public services. The cap on council tax also needs to be lifted to ensure new money can be raised locally and spent locally.

“Local government is the fabric of our country, even more so during this period of uncertainty for the nation. Councils are the ones who can be trusted to make a difference to people’s lives. To build desperately-needed homes, create jobs and school places, provide the dignified care for our elderly and disabled and boost economic growth.

“If austerity is coming to an end, then we need to make sure councils are at the front of the queue for more money. Only with adequate funding and the right powers can councils help the Government tackle the challenges facing our nation now and in the future.”