Local authority finance chiefs warn over cuts impact

Finance chiefs are increasingly worried about English local authorities' ability to maintain services in the face of funding cuts, a survey found - with social care facing the biggest squeeze.

Almost half (49%) of 237 who responded said they were less confident than a year ago and 56% had more concerns about their authority's overall financial position.

Those numbers were up from 41% and 44% respectively in the last such poll conducted by the Chartered Institute of Public Finance and Accountancy (Cipfa) 12 months ago.

It sent questionnaires to 442 local authorities in England - including councils, police and fire authorities, transport authorities, water authorities and national parks, with just over half responding.%VIRTUAL-ArticleSidebar-council-stories%

More than 95% named adult social care as the most threatened sector, followed by child social care (94%), environment and regulatory (44%) and housing (37%).

Cipfa urged more clarity over the operation of a move to allow councils to retain business rates receipts locally and action to factor in the cost of paying the new National Living Wage.

Some authorities "will need extra support from the Government if they are to avoid using their reserves to plug short-term funding gaps", it added - warning raiding reserves would leave them vulnerable to future shocks.

Ministers have suggested councils should delve into £22.5 billion of non-ringfenced reserves, saying the figure has increased by 170% in real terms over the past 15 years.

But the Local Government Association accused them of painting a "hugely misleading" picture and encouraging a "reckless gamble" that would "put local communities on the fast-track to financial failure".

Cipfa chief executive Rob Whiteman said: "As our survey makes clear, deep and ongoing budget cuts and increased demand mean that local authority finance directors are rapidly losing confidence in the ability of their organisations to deliver essential services.

"While this will come as no surprise to many in the sector, it should set alarm bells ringing across Government as more and more councils struggle to balance the books, with some authorities now facing a fiscal cliff.

"The Government urgently needs to acknowledge this in the Spending Review and adopt a long-term public sector-wide approach so councils can be funded in a fair and sustainable way if they are to avoid financial failure."