LGA: Economic problems have cost councils £4bn

English councils claim they are boosting support to the unemployed and vulnerable despite suffering a £4bn drop in income over the past two years due to the worsening economy.

The Local Government Association (LGA) said almost nine in 10 councils had been encouraging take-up of benefits by vulnerable households, while almost half had set up or supported credit unions to help people borrow money from a reliable source.

But the LGA said that over the past two years income from sales of land, council buildings and other capital projects had fallen by £2.7bn while interest earned on cash deposits had fallen by £1.3bn, against total annual expenditure of more than £110bn.

“More people need help”

LGA vice-chairman Sir Jeremy Beecham said: “Sources of income have dropped sharply at a time when more and more people are turning to councils to help them through tough times.

“At this time of repossessions and redundancies, even more people need the vital support that only councils can provide. They are helping to keep people in their own homes, offering support to the unemployed and helping small companies stay afloat.”

Job cuts warning

He warned that councils could cut more jobs to add to the 7,000 already lost from the 1.5 million-strong English local government workforce, excluding teachers, in the past six months.

Despite this, the LGA will work with local authorities to create an extra 7,500 council apprenticeships for young people who have been hit “particularly hard” by the recession.

The LGA surveyed council finance directors in England from May to July, receiving 88 responses.

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