Total Service Expenditure by local authorities in the North East region is forecast to decrease by 5% on average in 2014-15, the largest percentage budget decrease in the country. Included in the figures are the country’s largest spending reductions in Education (-10%) Environmental (-9.3%), and Central Services (-6.8%). Although some of the fall in Education spending is likely to be due to schools converting to academies, removing their funding from local authority control. The figures also show a below average percentage increase in Children’s Social Care spending (14.7%).
The reduction in expenditure comes after the North East was the only area to see an increase in local authority spending during 2013-14 and does include a small increase in Public Health expenditure (2.8%).
The data, compiled by the Department for Communities and Local Government (DCLG) and the Chartered Institute of Public Finance and Accountancy (CIPFA), shows that local authorities per capita spending in England will have fallen by 14.5% in cash terms by 2014-15, when compared to the last financial year of the last Parliament in 2009-10.
When adjusted for inflation this represents a steep drop of 29.1%, a significant reduction in the spending power of local authorities in England. This means that spending levels for 2014-15 will in fact have reduced to the same level of spending in 2005-06 in cash terms. In 2014-15 Total Service Expenditure (TSE) has been budgeted to fall by 3.1% to £93.5bn, while last year, budgeted spending excluding public health spend (which was a new responsibility from 2013-14) fell by 1.0%.
Rob Whiteman, CIPFA’s Chief Executive commented:
“The continued sharp downward trajectory of local authority spending in both cash and real terms shows the significant financial challenge councils have faced over the past few years. Many authorities have managed this reduction well and continue to live within their means, but we are now starting to see some councils face real and immediate financial pressures.
“If we are to prevent the financial failure of vulnerable local authorities, we must recognise that some councils have been hit harder than others and will need more support. But also that there is a real and pressing need for fundamental reform of the financing of local government if we are to see it not just survive but succeed and thrive over the coming years”.
The biggest losers in terms of service provision across the whole of England will be Housing with a 7.8% reduction in budgeted spending, followed closely by Education with a 7.6% cut to spending. Other areas seeing significant reductions are Culture (-6.3%) and Highways and Transport (-6.2%).
Local authorities in the West Midlands (-2.9%), East Midlands (-4.1%) and Total South East (-3.4%) will also continue to see large declines in expenditure. The North-West will have the smallest cut in council spending (-1.8%).
Notes to Editors: