Local Government Association: Council 2% cut 'unsustainable'

Generic image of pensioners The LGA says care for the elderly could be cut

Plans to reduce council budgets in England by 2% in 2014-15 have been labelled "unsustainable" by the Local Government Association (LGA).

In the Autumn Statement the chancellor said councils would be exempt from a 1% budget cut next year, which most Whitehall departments will face.

But they will be expected to make further cuts in the following year.

The LGA warned that spending on social care for children and the elderly could now face reductions.

The government is planning to squeeze spending in most Whitehall departments in the next two years and use the £5bn saving to build new schools and transport schemes.

All but four departments will be expected to cut day-to-day spending by 1% (£950m) in 2013-14 and 2% (£2.5bn) in 2014-15.

During the Autumn Statement, George Osborne said because local government budgets were already being held down next year to deliver a freeze in council tax, they would not be expected to make any further savings.

But they will have to make the 2% saving in the following year, in line with other departments.

Sir Merrick Cockell, chair of the LGA, said local councils had already "borne the brunt of cuts to public spending so far" and the extra 2% was "unsustainable".

"While the Government has rightly heeded calls from the sector for no new cuts to the central grant councils receive from government next financial year, local authorities already face a possible £1bn cut to funding for 2013-14 on top of the 28% reduction set out in the spending review and the further 2% now announced for 2014-15.

What is the Autumn Statement?

Autumn leaves
  • One of the two major statements the chancellor has to make to Parliament every year
  • Since 1997 the main Budget - which contains the bulk of tax, benefit and duty changes - has been in the spring before the start of the tax year in April
  • The second statement has tended to focus on updating forecasts for government finances
  • Over the past few years this distinction has become blurred, with the Autumn Statement becoming more of a mini Budget
  • Under the last Labour government it was called the pre-Budget report

"So far local authorities have largely restricted the impact of cuts to discretionary areas such as culture and environmental services, with councils working hard to protect spending on social care for children and the elderly. But even these areas are now facing reductions. That impact will only increase in line with any further cuts.

"The lateness of the Autumn Statement, which has pushed back the announcement of local government's financial settlement, is making it difficult for councils to plan for the next financial year.

"Combined with the uncertainty over what could be up to an unexpected extra £1bn in cuts to council funding next year, this is creating a very damaging situation and must not be repeated in future."

The LGA said it was in talks with the Treasury to explore ways to reduce the size and impact of any unexpected cuts.

Councillor Gerald Vernon-Jackson, leader of the Liberal Democrats in local government, welcomed the decision to protect council budgets in the next year but said Lib Dem councillors would continue to lobby against the extra 2% cut.

"Rather than champion his sector and encourage it, Eric Pickles has criticised it and - as one of the first to settle the sector's cuts with George Osborne back in 2010 - has been happy to see 28% cuts to the sector, plus a further £1bn subsequently."

Among other Autumn Statement measures the LGA welcomed the government's plan to fund ultrafast broadband in twelve smaller cities across the UK.

Councillor Flick Rea, chair of the LGA's Culture, Tourism and Sport Board, said: "This announcement is a positive step towards better connecting communities in our cities.

"However, the government needs to focus on quickly securing the EU's permission to release the funding under state aid rules so councils don't have long delays before they can begin roll-out schemes, as they did with the rural programme."

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