“The Ministry of Housing, Communities and Local Government has only a “shaky grasp” of the issues facing local authority finances, the Public Accounts Committee has claimed.
A report published by the committee today noted a significant reduction in councils’ spending power had been imposed at the same time as increases in demand pressure.
Local authority spending power, comprising government funding and council tax, has fallen by 28.6% since 2010-11, while key services have come under increased pressure, the PAC said.
In the same timeframe there has been a 14.3% growth in the estimated population aged 65 and over in need of social care, while authorities have endured a 10.9% increase in the number of children being looked after.
PAC chair Meg Hillier said: “It is no secret that councils are under the cosh.
“The mystery is how central government expects their finances to improve when it has such an apparently shaky grasp of the issues.”
The committee criticised MHCLG’s lack of an agreed measure of sustainability for local government finance or a clear definition of ‘unsustainable’.
The PAC suggested that MHCLG is holding out for a favourable spending review, but noted that the review is now under greater pressure given the announcement of long-term NHS funding.
The committee report also pointed to the first year of the 2015 spending review (2016-17) in which councils with social care responsibilities overspent their service budget by over £1bn and used £858m in reserves.
Hillier said: “Central government’s view is, in effect, that it expects everything to work out in the end. We beg to differ.” …”