Figures released today show that local authority spending in England is estimated to have fallen by just under 30% over the course of this Parliament.
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. Meaning 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 said:
“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 will be Housing with a 7.8% reduction in budgeted spending, followed closely by Education with a 7.6% cut to spending, although much of the fall in Education spending is likely to be due to schools converting to academies, removing their funding from local authority control. Other areas seeing significant reductions are Culture (-6.3%) and Highways and Transport (-6.2%).
In contrast to this funding for Children's Social Care will increase by 16.4% in 2014-15 and Public Health will see an increase of 5.5% from last year in budgeted spending.
The 2014-15 figures also show a decrease in all regional spending by local authorities compared to 2013-14. The East Midlands (-4.1%) and North East (-5.0%) stand out as the local authorities reducing their budgeted spend the most.