Has the local government sector reached crisis point?


By Don Peebles, Head of Devolved Governments and Policy and Technical, CIPFA

2018 has not been an easy year for local government. What with several councils teetering on the brink of financial collapse and the depletion of many vital services, it is clear that the sector has reached crisis point. 

Given the scale of the financial challenge facing local authorities, it may be surprising to some that CIPFA and the Institute for Government’s (IfG) latest Performance Tracker has found that public satisfaction with local services has broadly held up, indicating that the sector has managed to become more efficient. 

Indeed, the data shows that in terms of neighbourhood services, such as transport, housing and cultural services, service provision appears not to have fallen at the same rate as spending and the decline in resident satisfaction since 2012 has not been as large as the decline in spending. Furthermore, local authorities are now collecting waste, inspecting food businesses, opening libraries and maintaining roads more efficiently than they were in 2010.

These figures highlight how well local authorities have coped under years of fiscal retrenchment, but they must not encourage any sense of complacency about the state of the sector.  Particularly as the efficiency figures do account for the impact on staff, the use of unearmarked reserves and the shifting of costs onto individuals.

In regards to staff, the several case studies of local authority savings emphasise the increasing productivity of its workforce, but do not explore the impact on staff morale or retention. For instance, with food standards, hygiene staff are undertaking more inspections and audits per person and there are now fewer paid staff per person. In libraries, full-time paid staff per library has declined drastically (there were the equivalent of 4.6 full-time paid staff per library in 2009/10 – now this has declined to 3.8). Yet there is no data that clarifies how staff morale, recruitment or retention has held up. And I suspect that if there was information on this then the results would be concerning, particularly as a 2015 Guardian survey of local government staff showed that 95% of respondents felt stressed at work.

In terms of the use of unearmarked reserves, CIPFA and IfG’s Performance Tracker highlights how the changes in levels of reserves clearly shows how the sustainability of the sector is under threat.

Since 2015/16, reserves have fallen. And while the latest local authority outturn figures for 2017/18 show that reserves have increased by 2.7%, this is largely due to the funds collected through the social care precept. CIPFA, together with the IfG, states that the decline in reserves suggests that local authorities are struggling to meet their day-to-day costs and so are having to draw upon their emergency funds to pay for services, particularly areas such as adult and children’s social care. Services that now make up 54% of all local government spending. 

Because the significant cost of social is crowding out other spending, where local authorities can get people to pay directly for services, it is often doing so. For example, local authorities are introducing new charges for garden waste collection, while using more volunteers and community groups to run services such as libraries. And of course, without any extra funding, the reality is that the size of the local government services on offer will continue to shrink. Indeed, figures from the ONS that show that if the Government chose to keep commitments on health, long-term care and payments to pensioners, it would have nothing left for any other form of public spending. 

If local authorities have no choice but to pay for services by charging individuals, drawing down on reserves and by cutting back on staff, then I have no doubt that local authorities will not be able to operate at current levels of efficiency and that public satisfaction will be adversely affected. In the short-term, the only way to prevent this is to give local authorities a fairer financial settlement in the next spending review. 

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