Local government needs fiscal devolution and more powers to secure a financially sustainable future, council chiefs have told us in an exclusive survey.
This year’s The MJ and Local Government Information Unit (LGiU) study found nearly two-thirds of councils were confident of becoming financially self-sufficient by 2020, but only if Whitehall offers them more powers.
The wish list of the 156 chief executives, finance directors, leaders and finance portfolio holders across 132 councils included the ability to raise specific local taxes, council tax rebanding, and more powers over charging and trading.
Even with more fiscal devolution, one in five do not envisage their authority becoming financially sustainable.
Seven in 10 do not think devolution will lead to a meaningful redistribution of funding and spending power from Whitehall to local government while eight out of 10 believe increases in locally-raised revenue will fail to balance the proposed phasing out of formula grant by 2020.
Communities secretary Greg Clark told The MJ: ‘This historic four-year funding settlement means nearly two-thirds [60%] of councils are confident they will be financed independently of central government within five years – something local government has campaigned for over decades.
‘There is a clear appetite for greater devolution of powers from Whitehall to town halls, which we’re doing through ground-breaking deals across the country and our plans for radical reform of business rates.
‘All this will ensure councils will be able to continue delivering the services their residents value while at the same time keeping council tax bills down.’
But Communities and Local Government Committee chair Clive Betts said: ‘If you’re going to have real devolution you can’t simply devolve powers – you also have to devolve the ability to raise money from a range of different sources. Localising business rates is a step in the right direction but it’s still not enough.’
Worryingly, one in 10 councils admitted their services had deteriorated in the last year while nearly four out of 10 councils confessed their 2016/17 budget will lead to cuts in frontline services that would be evident to the public.
At the same time as more of the public start to notice cuts after years of satisfaction levels being maintained, nearly nine in 10 local authorities will increase council tax this year – up from 50% in 2015 when the freeze grant was still available.
In addition, 88% of our respondents from counties and unitaries said they were ‘likely or very likely’ to take advantage of the 2% social care precept offered by the Government – even though three in four said this would not relieve budget constraints in this department.
On top of this, our research found councils are being forced to freshly consider charges, including everything from bereavement to adult social care services.
To cope with their financial position, eight out of 10 plan to eat into their reserves this year – up from the 60% of councils that dipped into them in 2015.
Chief executive of the LGiU, Jonathan Carr-West, said: ‘Local government finance is a mess. Our research shows that right now councils are cobbling together their finances by using reserves and increasing charging wherever they can.’
Finance spokesman for the Society of Local Authority Chief Executives, Paul Martin, added: ‘The results reflect concern from across local government that, as proposed, the current financial settlement will have a markedly different impact across the country and that without further powers to raise income locally this will not be sustainable for many areas.’
Shadow communities secretary Jon Trickett said: ‘The MJ survey reveals continuing deep unease about the state of local services and shows that residents are facing a double whammy of ongoing cuts at the same time as rising taxes and charges.
‘No matter what gloss ministers put on the situation, this survey reveals the authentic voice of local councils. This is will be a very tough year for local government and for the communities they seek to serve.’
For our analysis of the results click here.
And for an analysis by Mr Carr-West click here.
