“A further 40 per cent real terms reduction in local government grant funding in the Spending Review would deliver the £10.5 billion knock-out blow to cherished local services, the Local Government Association warns today.

Non-protected government departments have been ordered to draw up savings plans worth, in real terms, 25 and 40 per cent of their budgets ahead of the Spending Review on November 25, which will set out government spending plans for the next four years.

Analysis by the LGA, which represents more than 370 councils in England and Wales, reveals a 40 per cent real terms reduction to core central government funding would be worth £8.4 billion. The same cut to separate local government grants would see a further £2.1 billion lost from council budgets.

This would mean local government losing 64 per cent of its grant funding between 2010 and 2020.

In its Spending Review submission to the Treasury, the LGA has already predicted councils will face almost £10 billion in separate cost pressures, through government policies, inflation and demand, by 2020 even before another penny is taken out of council budgets.

Together with another 40 per cent reduction to funding from central government, this would leave councils facing £20 billion in funding cuts and increased cost pressures by the end of the decade. Local government leaders say this would devastate local services and communities.

To put those figures into context, annual council spending on individual services in 2013/14 include:

Bin collection and recycling – £3.3 billion;
Arts and leisure (libraries, leisure centres, museums) – £2 billion
Road maintenance – £1.3 billion;
Subsidised bus services and free travel for elderly and disabled – £1.7 billion
Street cleaning – £717 million;
Parks maintenance – £690 million;
Street lighting – £530 million
Trading standards, noise, environmental health – £480 million.

The LGA said even if councils stopped providing all of these vital services for their residents, it would still not be nearly enough to plug the potential £20 billion hole in their finances by the end of the decade.

Lord Porter, LGA Chairman, said:

“Councils are under no illusions about the challenge that lies ahead. We know we face almost £10 billion in cost pressures by 2020 even before the prospect of further challenging funding reductions over the next four years.

“What is clear is that another 40 per cent real terms reduction to local government grant funding on top of these cannot be an option on November 25.

“It is a false economy to reduce funding to local government while attempting to prop up other departments.

“Providing councils with fairer funding is the only way to avoid the unintended consequence of other parts of the public sector, such as the NHS, being left to pick up the financial pieces. When making its spending decisions government must consider the huge pressure funding reductions to councils would have not just on vital local services but on the public sector more widely.

“Councils have worked tirelessly to shield residents from the impact of the 40 per cent government funding reductions they have been handed since 2010. However, the resilience of local government services cannot be stretched much further.

“It would be our residents who would suffer as councils are no longer able to deliver some of their statutory duties, like street cleaning and providing the free bus travel that is a lifeline to our elderly and disabled.

“Closing every children’s centre in England would save £700 million but this would only be enough to plug the funding gap facing adult social care for one year. Councils could stop fixing the two million potholes they fill each year to save £600 million by 2020, but this would still not be enough to keep providing free bus travel to elderly and disabled residents.

“These are the difficult decisions councils will be forced to face. Many of the things people take for granted, like clean and well-lit streets, maintained parks and access to leisure centres, will become a thing of the past as a result.”

Additional information

Breakdown of local government core spending (figures in £000s and exclude expenditure on schools and housing benefit).

2013/14
Education
£4,249,676

Highways
£1,591,039

Public Transport
£1,850,344

Children’s Social Care
£6,914,607

Adult Social Care
£14,565,464

Housing
£2,003,473

Cultural Services
£2,708,616

Waste Management
£3,324,260

Other Environmental Services
£798,707

Regulatory Services
£888,334

Planning and Development
£1,262,183

Central services
£2,618,551

All other services, capital financing and other costs
£4,693,501

Public Health
£2,507,832

Total net expenditure
£49,976,587″