This year’s Spending Review comes at an unprecedented time in our history, as we battle to minimise the impact of a second wave of COVID-19 on people, the economy and public finances. It also presents a once-in-a-generation opportunity to shape the direction of this country for years to come.
The Local Government Association’s (LGA) submission to the Treasury on behalf of councils makes the case that bringing power and resources closer to people is the key to improving people’s quality of life, tackling deep set inequalities and building inclusive growth across the country.
Recent LGA polling shows that 73% of residents trust their local council to make decisions about services in their area. After a decade of reductions in funding and rising demand, councils face a precarious financial position following the impact of COVID on their citizens, staff, services and budgets.
Independent estimates by the Institute for Fiscal Studies (IFS), commissioned by the LGA, suggest another £2bn might be needed this year to meet the pressures and non-tax income losses councils have and will continue to experience, which could rise to £3.5bn. Further funding to cover local tax losses, as well as one-off costs incurred to help local areas recover from the pandemic, will also be required.
Over the next few years, councils will continue to face demand pressures on their day-to-day services, against weaker income prospects. Further IFS analysis commissioned by the LGA shows councils face an estimated £5.3bn funding gap by 2023/24 which could grow to as high as £9.8bn due to COVID-19’s impact.
There needs to be a re-think of public finances with a multi-year financial settlement. The LGA’s Spending Review submission sets out how councils can be the driver to achieve shared priorities between central and local government. Together, we can strengthen the UK’s economic recovery, level up economic opportunity, tackle social and health inequalities, improve outcomes in public services, achieve net zero carbon emissions and improve the value for money of public spending.
Cllr James Jamieson is chairman of the Local Government Association
Read the LGA’s Spending Review submission at: https://www.local.gov.uk/re-thinking-public-finances
