LGA sets out radical public sector reforms to meet £20bn funding shortfall

Pooling funding for public services in a local area into local budgets, integrating health and social care policy, and removing the ring-fencing on all local authority budgets are among 20 reforms proposed by the Local Government Association in its submission to the forthcoming comprehensive spending review.

The association warned the Treasury that frontline council services would face a funding shortfall of up to £20bn a year by 2015 if budget cuts in the spending review are imposed without reform of the way the public sector operates.

The LGA highlighted some of the pressures local authorities are facing:

• Anticipated cuts in central government grant funding, other than schools funding, of 20%
• An estimated £5.6 bn increase in the cost of adult social care by 2015
• Meeting an estimated £1bn increase in the cost of waste disposal by 2014-15
• Covering the costs of predicted increases in demand for primary school places, children’s services and child protection costs, and
• A potential increase of up to 20% in the £1.1bn cost of concessionary bus travel for pensioners.

The association claimed that devolution of power over a host of services to a local level could save at least £20bn a year without harming frontline services.

Its proposed reforms are to:

1. Pool funding for public services in a local area into local budgets. This alone could save £100bn over five years, the LGA claimed
2. Integrate health and adult social care policy
3. Remove the ring-fence on all local authority budgets
4. Give local authorities a commissioning role over education and skills provision in their areas
5. Abolish the landfill tax or return its proceeds to local government
6. Ensure that the new waste strategy does not add to the local government’s costs
7. Give local enterprise partnerships the power to make the decisions about the allocation of public funding to economic interventions in their area
8. Bring together public spending for local capital projects into a single place-based pot
9. Provide incentives for business growth that provide a fair and predictable return to councils, and are not cash-limited
10. Return control over business rate income to councils
11. Introduce tax increment financing
12. Provide for the expansion of local development tariffs
13. Reform the council housing finance system
14. Devolve all existing bus subsidy through a single funding stream to local transport authorities
15. Provide local transport authorities greater powers to commission bus services locally
16. Enact a broad and clear general power of competence for councils
17. Streamline existing reporting requirements for local authorities
18. Require departments to make the case for any new data items it wishes to collect from local government
19. Enhance the new burdens process with a requirement for an independent assessment of the resources needed for new policies
20. Fully deregulate the setting of fees and charges for local government services

Baroness Margaret Eaton, chairman of the LGA, said: “Councils have made huge efficiency savings in recent years, and the scope to make further savings without cutting services is limited.

“We know the public sector is facing deep cuts in the Government’s spending review. We have laid out practical plans to deliver big savings by cutting out unnecessary waste and red tape in the system and devolving control over public services to local people who know best what their areas need.

“Ministers have moved quickly to cut burdens on councils, but they need to introduce further reform to make the savings we think are possible. People will not forgive those who cut frontline services without first exhausting every possible avenue for cutting unnecessary waste, complexity and red tape within the system.”