Council funding remains 14 years low.

The Institute for Fiscal Studies has recently released a report delving into the shifting landscape of local government finances, revealing a concerning trend of dwindling core funding per resident over the past 14 years. This revelation emerges amid a General Election campaign that has sidestepped the critical issue of addressing council funding, which has been steadily gaining significance in recent times.

Scrutinising the trajectory of council finances since 2010, juxtaposed with the aftermath of the most recent General Election in 2019, the report discloses a stark reality – funding derived from central government subsidies and local taxes has plummeted by 9% compared to 2010 levels. In light of a substantial surge in population size, this translates to a staggering reduction of approximately 18% per resident.

Furthermore, the report exposes a notable shift in councils’ revenue generation strategies, with council tax now accounting for 53% of core funding, a significant leap from the 36% contribution recorded in 2010.

However, the realm of council expenditure is an intricate tapestry of change, as elucidated in the report’s findings. Despite an overarching decline in per-person spending on service provision, there has been a significant 17% upsurge in expenditure per individual on adult and acute children’s social care. These two spending categories collectively absorb a considerable 65% share of council budgets for 2023-24, inevitably leading to austerity measures in other sectors. For instance, housing spending has witnessed a dramatic 33% reduction, while allocations for highways, transport, culture, leisure, and planning have all dwindled by over 40%.

David Phillips, an associate director at IFS and one of the report’s authors, highlighted the mounting challenges faced by councils amidst escalating demand for essential services. He underscored the strain on local councils posed by rising needs for special educational support, children’s social care interventions, adult social services, and homeless accommodation. Despite soaring inflation rates for crucial services outpacing the economy-wide inflation, funding remains notably lower than the 2010 benchmarks, compelling councils to slash expenditures on non-essential areas like leisure, culture, planning, transport, and youth services in favour of upholding statutory obligations towards a minority of distressed and vulnerable residents.

Phillips voiced concerns about councils teetering on the edge of financial instability, with the looming possibility of more authorities facing fiscal turmoil unless demand pressures subside. He lamented the glaring absence of discourse on council funding in the election campaign, highlighting its pivotal significance post-election.

As local government plays a fundamental role in service delivery and upholding democratic principles, the imperative of securing adequate funding for councils cannot be overlooked. The report from IFS serves as a clarion call for policymakers to address the pressing issues plaguing local government finances and chart a sustainable course forward.

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