MPs have criticised the Department for Communities and Local Government for failing to review council spending cuts, warning the government will not appreciate cuts that threaten the “viability” of statutory services.
A report following the Public Accounts Committee’s inquiry into the financial sustainability of local authorities found the 37% reduction in funding since 2010 has not hit authorities equally.
Some have faced reductions of just 5%, while others have had to deal with massive 40% reductions. In the most deprived areas, where funding has been hardest hit, services may even struggle to provide care, MPs warned.
Committee chair Margaret Hodge said: “Further cuts could not just undermine the entire viability of most optional services, but might threaten statutory services in these areas.”
The report stated: “The Department does not understand the impact over time of reductions in funding to local authorities, and the potential risks of individual authorities becoming financially unsustainable if reductions continue.”
The Department for Communities and Local Government (DCLG) looked only at data on spending, without much information on service levels, service quality and financial stability, according to criticism from Hodge.
“Looking to the future, if funding reductions were to continue following the next spending review, we question whether the [DCLG] would be in a position to provide assurance that all authorities could maintain the full range of their statutory services,” she said.
Overall, local authorities have responded well to funding cuts, the report stated, but external auditors of councils have voiced concern over whether some authorities will be able to continue making savings and be financially sustainable.
“This is particularly the case for authorities responsible for adult social care and children’s services,” the report stated.
Impact on service users
Value for money in local authorities can be damaged by “cost-shunting”, Hodge said. She cited the example of how reductions in local authorities’ social care provision has, in some cases, caused ‘bed blocking’ in NHS hospitals.
The DCLG’s lack of data on the level of services councils are providing means it’s in a “weak” position to know how funding cuts are affecting service users, the report stated.
The Committee has now called on the DCLG to regularly review existing activity data across adult and children’s services to monitor the impact of funding reductions on services, including those delivered by other local bodies, such as the NHS.