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Cost of financial balance will soon be felt by council tax payers

According to new research from Grant Thornton UK LLP, local authorities across England are confident that they can continue to balance the books. However, after five years of making major savings, many councils have become lean and the capacity to continue weathering the financial storm could come at the cost of their ability to deliver the range and depth of public service council taxpayers are accustomed to.

The research report, 'Reforging local government', explores five years of funding reductions. The findings reveal how local authorities are responding to the financial challenges, highlight key trends and suggest a way forward.

Paul Dossett, Head of Local Government at Grant Thornton UK LLP, said: "The achievement of local government in responding to the challenge of austerity has been costly in terms of staff reductions and some withdrawal of non-statutory services. To date, most people have seen little difference in the service levels that their local council offers. However, the scope for efficiencies through back office rationalisation is diminishing each year and, from as early as next year, councils will need to focus their savings programmes on the services that they provide directly to the public."

When asked whether their councils could reach a tipping point in the next five years a small minority of 4% thought that this was probable, with another 11% saying that it was reasonably possible. The highest proportion, at 49%, considered it possible but not likely and a further 35% thought it highly unlikely.

Other key findings from the research include:

  • Local authorities are projecting significant funding gaps over the next three to five years but there is risk in the lack of detailed plans in place to address these deficits, particularly after 2016/17.
  • Local government needs to develop a deeper understanding of their local partners to deliver the transformational changes that are needed, and there is still progress to be made in breaking down silos in the public sector.
  • Elected members have an increasingly important role in ensuring good governance is not just about compliance with regulations but is also about effective management of change and risk.
  • Councils need to improve the level of consultation with the public when prioritising services and make sure that their views help shape council development plans.

Paul Dossett concluded: "Local government has changed significantly in the five years since the 2010 Spending Review and the pace of change is accelerating. It has a pivotal role in fostering vibrant local economies. The government recognised that centralised government for such a large population is an outdated model but Whitehall needs to go further and faster in allowing localities to drive growth and public service reform including proper fiscal devolution that supports businesses and communities. Comprehensive fiscal powers, such as the ability to levy and vary local taxation, would be transformative."