The government is in denial over the “perilous state” of local finances as councils struggle to maintain adult social care services, a House of Commons select committee has said.
In a report published on the Parliament website, the Public Accounts Committee said the government needs to “get real”, listen to the concerns of local government and take a “hard look” at the real impact funding reductions have on local services.
Over the last eight years, the government has cut the funding it gives to local authorities in England by nearly half, while, at the same time, demand for critical council services like adult social care has risen.
Some councils are now in an extremely worrying position, the Committee said, overspending their budgets for social care, reducing key services, falling back on financial reserves and increasingly relying on generating other sources of income, which comes with greater risks.
The report notes that the government has had to inject large amounts of additional funding to ensure that the local authority sector can keep going in the short-term: £1.4 billion in the 2018 budget. Yet, there is still no sign that the Department has a clear plan to secure the financial sustainability of local authorities in the long-term,” the Committee said.
Public Accounts Committee Chair Meg Hillier said the government has rejected a number of previous Committee recommendations on these subjects and is frustrated to have to repeat the same concerns about the sustainability of the sector and the ability of local authorities to provide the vital services that taxpayers need.
“The Government is in denial about the perilous state of local finances. It insists the sector is sustainable yet is unwilling or unable to back up this claim,” she said.
“Flimsy assertions have no place in financial planning. The fact Government has bailed out councils with short-term fixes should be evidence enough that all is far from well.
“Government needs to get real, listen fully to the concerns of local government and take a hard look at the real impact funding reductions have on local services. And then it needs to plan properly for the long-term,” Hillier added.
“It is extremely troubling that the Government views the financial sustainability of councils solely in terms of statutory services, rather than full range of services local people need and can reasonably expect councils to provide.”
Responding to the PAC report, Cllr Richard Watts, Chair of the Local Government Association’s Resources Board, said: “With councils in England facing an overall funding gap of £8 billion by 2025, we are pleased the Committee has reinforced our warning that funding cuts and demand pressures are pushing local services to the brink.
“The Spending Review will therefore be make or break for vital local services and securing the financial sustainability of councils must be the top priority. If we truly value our local services then we have to be prepared to pay for them.
“We agree with the Committee that the financial sustainability of local government cannot be defined by the ability of councils to just provide statutory duties.”