local authority spending in England falls for the first time since the introduction of council tax

05-07-2011

Overall Total Service Expenditure spending by local authorities in England has fallen this year by 5.7 per cent to just over £99.5 billion compared to 2010-11, according to figures compiled by the Department of Communities and Local Government (CLG) and the Chartered Institute of Public Finance and Accountancy (CIPFA).  This is the first fall in spending since Council Tax was introduced in the early 1990s.

Spending levels for 2011-12 have reduced to near 2008-09 spending levels, equivalent to spending £1,921 per person.

Some areas of spending have had their spending reduced more significantly than others, the figures show.  Planning (-32.1%), Highways (-20.7%) and Housing (-14.9%) have taken the hardest hits to their budgets compared to 2010-11, whilst Social Care spending will rise slightly (1.6%).

The figures also show regional variations in spending by local authorities.  Local authorities in the North West (-7.8%), North East (-6.9%) and South West (-7.0%) are reducing their spending the most, whilst councils in the South East (excluding London) are reducing theirs by the least (-3.2%).

Ian Carruthers, CIPFA’s Director, Policy and Technical said:

‘These statistics underline the difficult decisions councils have been faced with in setting their 2011/12 budgets.  It is only through effective financial planning and an emphasis on efficiency that the impact on front line services has not been greater.’

Local Government Minister, Grant Shapps said:

‘This year, despite the need to tackle the budget deficit we have inherited from the last administration, councils will still be spending £118 billion – over £5,000 per household.  Local authorities are planning to spend more, in cash-terms, in 2011-12 than they did as recently as in 2008-09.

By cutting waste, more joint working and improving procurement, councils can do more for less.  Good councils can hold council tax down and protect frontline services.’

Ends

Contact: Lindsay Machin / Chloe Forbes
CIPFA Press Office
t 020 7543 /5645/5787
e lindsay.machin@cipfa.org.uk / chloe.forbes@cipfa.org.uk

Notes to Editors:

1. Full details are available from www.cipfastats.net or contact the CIPFA Press Office.

2. The £99.5bn is TOTAL SERVICE EXPENDITURE, which comprises all direct revenue payments and income from services for which the authority alone is responsible, as opposed to transfers to and from, or expenditure on behalf of, other accounts, funds, authorities or miscellaneous bodies.
The Government’s figure of £118bn is NET CURRENT EXPENDITURE, which comprises Total Service Expenditure plus other items of current expenditure and income within the GFRA.

Total Service Expenditure for 2011-12 is not directly comparable to previous years due to a change in Reversal of revenue expenditure funded from capital by statute (RECS), so the 2011-12 figures do not include RECS but 2010-11 figures include RECS. RECS for England in 2010-11 amounts to £1.070 billion.

The 2010-11 figure for Highways and Transport has been revised following changes proposed by Greater London Authority relating to removal of Business Rates Supplement income and the addition of Revenue Expenditure funded from Capital by Statute.

Please also note that there have been changes in responsibility between NHS and local government for adults with learning disabilities, where from 1st April 2011 the transfer of funding was made directly from Department for Health to LA's, where they now receive a new non-ring fenced grant which amounts to £1.2 billion in 2011-12.

3. About CIPFA

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. Our 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed. As the world’s only professional accountancy body to specialise in public services, CIPFA’s portfolio of qualifications are the foundation for a career in public finance. They include the benchmark professional qualification for public sector accountants as well as a postgraduate diploma for people already working in leadership positions. They are taught by our in-house CIPFA Education and Training Centre as well as other places of learning around the world. We also champion high performance in public services, translating our experience and insight into clear advice and practical services. They include information and guidance, courses and conferences, property and asset management solutions, consultancy and interim people for a range of public sector clients. Globally, CIPFA shows the way in public finance by standing up for sound public financial management and good governance. We work with donors, partner governments, accountancy bodies and the public sector around the world to advance public finance and support better public services. This includes the development of local professional qualifications in African countries like Lesotho and Nigeria and in Europe in post conflict states in the Balkans.