Responding to the Spending Review, Steve Freer, CIPFA’s Chief Executive, said,
"The whole austerity programme has been a journey into unchartered waters. To date the performance of public bodies in managing unprecedented funding reductions has been remarkably good. It is the absence of economic growth rather than a failure to manage cuts which has thrown the Government's recovery strategy off track.
“However, we are now moving into the area of greatest uncertainty. Constructing the plan for 2015/16 is challenging; delivering more cuts and major change programmes when politicians are focused on the General Election will be extraordinarily difficult."
Specifically CIPFA has concerns about the impact of a further 10% cut to local government funding in 2015-16 which comes on top of a 35% reduction announced in 2010 covering 2011-2015. CIPFA believes it will be particularly challenging for local government to absorb yet another large reduction in funding.
The government has argued that when other measures are taken into account, such as powers to raise additional local income and other central government funding, local government spending reduces by only 2.3%.
However all of these measures are contingent upon factors largely outside of local government control. The ability to increase revenue from now largely localised business rates is dependent on a growing economy, and individual central government funding streams are neither guaranteed in the long term nor distributed evenly across the country.
In addition, the announcement of a council tax freeze grant for a further two years will only add to authorities medium to long term financial pressures and permanently reduce their resource base.
Both the Public Accounts Committee and the National Audit Office have expressed concern in the recent past about the Government’s understanding of the impact of cuts on local government and this further cut will continue to be felt most deeply by those local authorities with the greatest need.
Another significant announcement as part of the spending review was the integration of health and social care. CIPFA welcomes the £3bn that will be spent on services commissioned jointly by local NHS and local councils working together.
Commenting on the announcement on the integration of health and social care, Alison Scott, CIPFA’s Local Government Policy Lead, said,
“Closer working and joint planning between health and social care should lead to a far more effective use of resources for the system as a whole. This has been achieved so far in a variety of different ways from joint planning between organisations through to full integration.
“The announcement of £3.8bn in a single pooled budget to be spent on services commissioned jointly by local NHS and local councils working together is therefore welcomed and should build on the experience of the successful projects to date, recognising the diversity of existing approaches.”