Housing, planning and cultural services bearing brunt of cutbacks: Audit Commission

Almost half of the savings made by single tier and county councils (STCCs) this year have come from planning, housing and cultural services – even though they only cover 16% of service spending, research by the Audit Commission has revealed.

The watchdog warned that – with 60% of the total reductions yet to come – these services “cannot deliver similar savings every year”, adding that many councils would face “difficult decisions about how to meet their funding shortfall in the next few years”.

The Audit Commission’s Tough times report examined how local authorities were coping with “unprecedented” reductions to their income as well as the cutbacks they were having to make to ensure financial stability.

“Most local authorities are taking the right steps to make efficiency savings but have also had to reduce the quality and quantity of services,” the Audit Commission said. “Charges are going up in many councils.”

This research revealed that four out of ten councils planned to tighten eligibility criteria in adult social care. Such moves have led to a number of high profile judicial review battles this year. Lancashire County Council and Manchester City Council were successful in fending off challenges, while Birmingham City Council and – earlier this month – the Isle of Wight Council lost.

Other significant changes in approach being implemented by single tier and county councils (STCCs) are:

• Five out of six councils were planning to reduce the quantity or frequency of some services within cultural services
• Three out of four councils were planning to increase charges within environmental services
• Almost half of councils were planning to reduce service standards in highways and transport.

The report – which was based on a survey of auditors and analysis of councils’ budget data – found that while most councils were managing well, “a small number of councils may struggle to balance their books”.

Nine out of ten councils were well prepared for reductions and would deliver their budgets but the remainder were “at risk” of not meeting their budget for 2011/12, the watchdog said. Those most exposed were ones which faced large budget reductions but also had weak financial management.

Michael O'Higgins, Audit Commission Chairman, said: “We all know that councils, like the rest of the country, are experiencing tough times. They have seen their funding from government fall and their local income reduce.

"So far, councils have responded well to these challenges, and auditors believe that most will balance their books this year. Many have also protected the most vulnerable people in their area. But with more reductions to come, and wider economic problems intensifying the pressure, councils need to prepare for a potentially rocky road ahead.”

The Audit Commission pointed out that councils had seen their funding from central government fall by £3.5bn this year. They also expected to lose a further £1.2bn, in real terms, from locally generated income, with income from fees and charges as a result of the downturn.

The report found that most councils were not planning to make significant withdrawals from their reserves this year, and that some planned to increase them.

“Reserves alone cannot be used to balance budgets in the longer term, but there may be scope to use them more than currently planned - to give councils time to achieve sustainable efficiencies,” the Audit Commission said.

Philip Hoult