Lord Porter: The government must address the growing funding gap facing local services

Posted On: 
23rd April 2018

Cash-strapped councils are struggling to cope. While the Local Government Association is on hand to provide practical support, central government must take steps to address the funding gap before services suffer, warns LGA chair Lord Porter

"Councils are being forced to divert ever-dwindling resources from local services such as filling potholes to try and plug growing funding gaps in adult social care and children’s services."

Dealing with increased demand for local services at a time when funding has been reduced is the biggest challenge facing councils right now.

The recent National Audit Office (NAO) report on the financial sustainability of local government shows that councils’ financial health isn’t getting any better. It sets out the consequences on local services and warns of uncertain times ahead.

But councils, with the support of the Local Government Association (LGA), have been rising to the challenge and doing all they can to be innovative and come up with ways of doing more with less.

While the LGA has been extremely vocal in getting our message across to government about the financial pressures our members are under, we have been playing an equally important role in supporting councils via our sector-led improvement offer.

The LGA recognises that when resources get tighter, good financial management is more important than ever. This is why we run a peer challenge programme, which sees both members and officers (including finance experts), giving councils invaluable insight into how they are performing, by looking at their strategies, financial planning and delivery, so councils can assess how they might improve. We deliver more than 100 peer challenges, of all types, per year.

The LGA also has a team of finance improvement and sustainability advisers ¬– all former local government finance directors who work one-to-one with councils to carry out ‘lighter touch’ reviews and give practical financial and budgetary advice, based on their experience.

The government said it “firmly believes” that councils should be able to access the training they need, which is why it funds the LGA for sector-led improvement work. And our members recognise the importance and value of this too, with 96% of council leaders and 95% of council chief executives saying the support they have had from the LGA had a positive impact on their authority.

The LGA is also very active on the parliamentary scene, bringing our concerns around a range of issues, not just local government funding, to the attention of MPs and peers through briefings for parliamentary debates in the Commons and Lords, and also by submitting written and oral evidence to parliamentary inquiries.

In addition, we campaign on a whole host of areas, such as building local public services for the future, changing children’s lives, devolving employment and skills, and bringing to life the work of local government in our annual 24-hour tweetathon .

But despite the innovative ways in which the LGA and councils have been responding to the financial challenges of recent years, there is only so much they can do.

We’ve been clear of the need to secure the financial sustainability of local government, which faces an overall funding gap that will exceed £5bn by 2020, and the NAO’s report is confirmation of what we have been saying all along.

We understand that there isn’t a magic money tree and that the government has needed to make savings. But let’s not forget that councils provide 1,300 different statutory duties and responsibilities which our communities rely on day in, day out and their ability to continue doing so has become increasingly under strain.

The NAO rightly recognises that councils are being forced to divert ever-dwindling resources from local services such as filling potholes, maintaining our parks and green spaces, and running children’s centres, leisure centres and libraries, to try and plug growing funding gaps in adult social care and children’s services.

It also highlights how many councils are already doing what many households would when they’re struggling and in need of extra cash – turning to their savings. But as any household will know, you can’t keep dipping into your savings; sooner or later the money will run out. This is what the NAO means when it says that the current system is not financially sustainable.

This is why we are calling on the government to address the growing funding gap facing local services by allowing local government as a whole to keep every penny of business rates collected.

With the right level of funding, councils will be able to continue making a difference to people’s lives, whether it’s through building desperately needed new homes, creating jobs and school places, or providing dignified care for older and disabled people.

Lord Porter is a Conservative peer and chair of the Local Government Association