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28th January 2015

Solace response to PAC report on the Financial Sustainability of Local Authorities

On 28th January the Public Accounts Committee (PAC) published their report on the Financial Sustainability of Local Authorities. This is a statement from Graeme McDonald, Director of the Society of Local Authority Chief Executives (Solace) in response.

This report confirms the immense scale of the financial challenge facing local government. Continued reductions without a coherent plan for public service reform threaten the viability of statutory services. Government must act coherently and understand the cumulative impact of its decisions.

Local government’s core funding has fallen by 43 percent during the current Parliament. All serious studies have agreed with the PAC in concluding that local government finance is on an unsustainable footing. Figures released today show that next year alone councils will need to cut £1.1bn from other services to protect social care. This is equivalent to the cost of filling 20 million potholes, running almost every library in England or employing 80,000 school crossing patrol attendants. The next Secretary of State will need to confront this, it cannot be postponed any longer. Councils have led the way on deficit reduction but are rapidly approaching breaking point.

Government cannot abdicate responsibility for the consequences of its financial decisions. DCLG, therefore, needs the capacity and influence across Whitehall to ensure national Government is working coherently with local government and fully understands the cumulative consequences of all its decisions. The Department charged with representing local government nationally needs the ability to look across Government departments and influence how and when big financial and policy decisions are made. DCLG still needs to prove it is up to this job.

In the longer term, there is also a clear case for local government to move toward much greater financial independence from central Government, with the ability to raise and spend its own revenue. Councils are subject to a huge array of statutory duties and lack the ability to raise their own finance – they lack the ability to decide what they do or how they pay for it. Great councils of the past could spot a problem, agree on a solution, raise the money and tackle it. The current approach is neither sustainable nor democratic.