By Lucy Phillips
23 March 2010
Local authorities are failing to plan ahead for budget cuts despite an inescapable squeeze in public funding, the Audit Commission has warned.
In a report published today, the local government spending watchdog reveals that many councils are using the lack of clarity from Whitehall on where spending cuts will fall after 2011 as an excuse not to plan ahead. Political insecurities relating to the national and local elections are adding to the hiatus.
Councils, which receive two-thirds of their income from central government grants, have so far been ‘cushioned’ from the worst impacts of the recession because ministers kept to a three-year funding settlement ending in March next year, the commission says. Other sources of income will depend on local economic recovery, while levels of reserves vary widely from authority to authority.
Audit Commission chair Michael O’Higgins said: ‘The clock is ticking, and everyone needs to face this new reality. Some councils are using the last year of planned funding levels to prepare for harder times ahead, but it is worrying that others are reluctant to look beyond next year.’
The report, Surviving the crunch, is based on financial information from around 40 councils. It warns that many of those that are planning beyond next year are failing to do so realistically, with projected budget cuts ranging between 1% and 15%. It cites one metropolitan council that predicts savings of 5% to 12% after 2011 but has no plan for achieving them.
‘Improving efficiency, providing the same services for less money, is no longer enough. Councils need more ambitious plans to transform and protect services,’ said O’Higgins, adding that failure to act early would cause greater long-term damage to services.
Many local authorities, particularly district councils, also lack the change management and financial skills needed to plan ahead and redesign services, the report says.
23 March 2010
Local authorities are failing to plan ahead for budget cuts despite an inescapable squeeze in public funding, the Audit Commission has warned.
In a report published today, the local government spending watchdog reveals that many councils are using the lack of clarity from Whitehall on where spending cuts will fall after 2011 as an excuse not to plan ahead. Political insecurities relating to the national and local elections are adding to the hiatus.
Councils, which receive two-thirds of their income from central government grants, have so far been ‘cushioned’ from the worst impacts of the recession because ministers kept to a three-year funding settlement ending in March next year, the commission says. Other sources of income will depend on local economic recovery, while levels of reserves vary widely from authority to authority.
Audit Commission chair Michael O’Higgins said: ‘The clock is ticking, and everyone needs to face this new reality. Some councils are using the last year of planned funding levels to prepare for harder times ahead, but it is worrying that others are reluctant to look beyond next year.’
The report, Surviving the crunch, is based on financial information from around 40 councils. It warns that many of those that are planning beyond next year are failing to do so realistically, with projected budget cuts ranging between 1% and 15%. It cites one metropolitan council that predicts savings of 5% to 12% after 2011 but has no plan for achieving them.
‘Improving efficiency, providing the same services for less money, is no longer enough. Councils need more ambitious plans to transform and protect services,’ said O’Higgins, adding that failure to act early would cause greater long-term damage to services.
Many local authorities, particularly district councils, also lack the change management and financial skills needed to plan ahead and redesign services, the report says.
