If the economy ‘tanks’ post-Brexit, will shopping mall and carpark revenues be enough to compensate for government cuts?
“Years of chronic underfunding have left local government ‘on life support’ “
123 of England’s 353 councils sent information to the 2019 State of Local Government Finance survey, conducted by the Local Government Information Unit and Municipal Journal. Chris Tighe (possible paywall) reports that Jonathan Carr-West, chief executive of the LGIU, has warned of a future in which care for the elderly and for vulnerable children could be funded from shopping centre investments and car parks – “a significant risk if the economy ‘tanks’ “.
Survey findings include:
- More than half of English councils will eat into their reserves.
- Four out of five are investing in commercial developments to supplement their revenue this year to compensate for central government funding cuts.
- Nearly half of the local authorities are planning to cut services.
- Most will raise council tax this year and increase charges to stay afloat.
- A quarter said planned cuts to services in the coming year would be noticed by the public.
- 10 local authorities said they were concerned they would be unable to deliver the legal minimum service for residents.
- Last year, Northamptonshire county council was given special permission to sell its head office and rent it back after running out of money.
- Several other authorities have warned they are close to collapse.
- 8 in 10 senior council decision makers believed the current system for council funding was unsustainable.
- 82% were considering commercialising council services to raise extra money
- and 57% wanted to sell council assets.
- Children’s services and education were the top immediate financial pressures, for the second year running.
- Adult social care is still under severe strain
Four out of five English councils are investing in commercial developments to supplement their revenue this year to compensate for central government funding cuts.
The government’s annual funding settlement for local authorities, outlined in December, assumed that every council in England would implement the maximum 4.99% council tax increase, including 2% ringfenced for adult social care, in 2019-20. Analysts say that would add around £80 to the annual average bill for a Band D, mid-market, home — currently £1,671. An additional £24 can be added to the charge to fund the local police force.
But the Local Government Association said the tax rise would not be enough to prevent service and job cuts after eight years of austerity. It said councils would have lost almost 60% of their central government funding between 2010 and 2020 and face an overall funding gap of £3.2bn in 2019/20.
Jonathan Carr-West warned: “In the future, care for the elderly and vulnerable children could be funded from shopping centre investments and car parks, which carries significant risk if the economy tanks.” This year’s government spending review would, the survey warned, be “make or break” for vital local services.