Spending Review investment in local services vital to our national economic and social recovery

Cllr James Jamieson, Chairman of the LGA, sets out why the need for the 2020 Spending Review to invest in local services next year.

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By keeping essential services running, supporting older and more vulnerable residents and local businesses, councils have been on the frontline throughout this pandemic.

Councils have helped nearly 15,000 rough sleepers and homeless off the streets, provided vital support for those asked to shield earlier this year and hardship funding to struggling low-income households. Given their vital role in supporting local economies, it was right that the Government turned to councils when emergency grants needed to reach businesses forced to close. They stepped up to distribute more than £11 billion to 880,000 small businesses and are working hard to give out further grants during this second lockdown.

Council public health staff have been supporting NHS Test and Trace, reaching almost 99 per cent of contacts passed to us, compared to around 60 per cent for the national scheme.

We have been doing this at a time when councils have experienced greater financial pressures than ever, after £15 billion of central government funding cuts over the last decade.

More than two thirds of council expenditure is now on providing social care for our older and disabled residents as well as children and young adults. It is fantastic that we are all living longer and right that as a society we look after our most vulnerable. However, this does impose a huge financial burden with demography driving up the costs of care. 

The ability to bring in extra council tax – through the adult social care precept - and one-off grants have been a sticking plaster and not the long-term solution which is desperately needed.

This year, the Government has provided additional funding to help councils manage the impact of the COVID-19 crisis on their finances – which has been invaluable. However, an unfunded overall pressure of around £1.1 billion remains this year that councils might have to absorb.

Councils are unique in the public sector of having to set a balanced budget each year, and it is the legal duty of a chief financial officer to make sure this happens. As they try to prepare budgets for next year, it is clear this will be a huge challenge.

With the Chancellor’s one-year Spending Review on Wednesday, it would be a huge mistake for government to think it will be enough to ensure councils get through this immediate crisis unscathed.

Public finances are undoubtedly under huge strain but investment in local services is vital to our national economic and social recovery.

That is why we have set out to the Treasury the positive case for providing councils with an extra £8.7 billion in the Spending Review so they can plug funding gaps, meet demand pressures and improve services next year. This assumes that all councils raise council tax by 2 per cent next year and government grants go up by inflation.

This year has been incredibly hard for our nation. This virus has not only tragically claimed the lives of tens of thousands of people but the true impact of the pandemic on wider health and mental wellbeing has yet to become clear. It has devastated our economy and exacerbated long-standing inequalities.

Positive news about COVID-19 vaccines has provided a sense of renewed optimism about the future and the prospect of our normal way of life returning next year.
As the focus shifts towards how we build back better, it would be disastrous if councils are forced to find further major savings to already stretched budgets next year and are choked off from being able to act locally to restore local economies and rebuild communities as a result.

Now is not the time for the services our communities will turn to for help to have to be drastically scaled back or lost altogether.

Much has been made of a reset within government in the past week. We hope this will lead to lessons learned from the pandemic which has shown that the centralised design and control of public services from Whitehall does not work as well as an approach that enables councils to innovate and create new services locally.

This means government making better use of council’s expertise and local knowledge to urgently build upon successful local contact tracing efforts to address the current limitations of the national Test and Trace scheme, placing councils shoulder-to-shoulder with the NHS to co-ordinate the roll-out of a vaccine and working with them to co-develop a clear strategy out of this second lockdown.

It also means recognising that bringing power and resources closer to all of us is the key for all our communities to thrive.

One thing the Prime Minister has made clear this week is his desire to renew momentum behind the levelling up agenda. There is clear and significant evidence that outcomes improve and the country gets better value for money when councils have the freedoms and funding to make local decisions.

Our own polling shows that three quarters of people trust their local council to make decisions about how services are provided in their local area.

Different areas of the country will need their own unique response in the coming months and years and councils must be central to efforts to level up the stark inequalities the pandemic has exposed, develop a green recovery, address skills gaps and level up the economy so that it benefits everyone.

Cllr James Jamieson
Chairman, Local Government Association