People should expect poorer local services in the years to come, says study

Society must accept that English councils will only be able to provide fewer or lower quality local services in the future, experts have said.

A study from the Institute for Fiscal Studies (IFS) showed that the expectation for local authorities to operate mainly on revenue from council tax and business rates will mean council purses cannot keep up with rising costs and demand.

Overall spending on local services fell by 21 per cent between 2010 and 2018 – but some services, like housing, were hit even harder.

David Phillips, an sssociate director at the IFS and an author of the report, said: “Current plans for councils to rely on council tax and business rates for the vast bulk of their funding don’t look compatible with our expectations of what councils should provide.

“A proper national debate on how much we are willing to pay and what we expect of councils is therefore needed. Without it, we will default to a situation where the services councils can provide are gradually eroded without an explicit decision being taken – until ad hoc funding is found as a response to political pressure. Such an approach would not be conducive to long-term planning by either councils or the government.”

Despite a deepening social care crisis, the IFS said those services have been relatively protected from the full force of council cuts. Adult social care spending fell by 5 per cent on average, compared to cuts of 40 per cent in both leisure services and transport.

But with annual council tax increases of 3 per cent – the most local authorities can increase it by without a referendum on extra tax ring-fenced for social care – adult social care alone will require up to 60 per cent of local tax revenues within just 15 years (up from 38 per cent now).

Neil Amin-Smith, a research economist at the IFS and an author of the report, said it is “equally important to consider how funding is allocated between councils, and how willing we are to tolerate bigger differences in tax and spending between different parts of England in order to give local councils more control and stronger financial incentives”.

He added: “Without debate, the risk is that we continue with reforms to the funding system that emphasise local financial incentives, while trying to regulate for common service standards in the context of a funding system that is just not set up to deliver them.”

Meanwhile several councils in England have been warned against running out of cash, as current spending trends threaten to exhaust their reserves.

At least 11 local authorities would have spent through their entire reserves within four years if no more cash was put in the pot. The Local Government Association blamed the “systemic underfunding” of councils.

There was £14bn being held in reserve between the 152 English councils last year.

Richard Watts, the chairman of the Local Government Association’s resources board, said earlier this year: “If we truly value our local services then we have to be prepared to pay for them,” he said. “Fully funding councils is the only way they will be able to keep providing the services which matter to people’s lives.”