Saturday 13 November 2010

Local Authority Cuts: when 28% is not 28%

The CSR saw 28% cuts to Local Authority spending. By any measure, that's a big cut. What people haven't realised yet (but soon will) is the implication of this figure and that it means more than just a 28% reduction in services.

Local Authorities cost a certain amount to run which, without fundamental changes to their business model which they struggle to do, are relatively fixed. So not a huge amount to be saved there.

Then there are statutory duties which can't really be touched. So child protection, for instance (increasingly expensive since the Baby Peter case), won't see budget cuts.

In addition to these, many authorities have already outsourced many functions and have contracts with providers. These contracts can't be changed easily or quickly or for free. Some authorities have up to 40% of their budgets tied up in these contracts.

This leaves a situation where the 28% overall cut must be found in, say, 50% of the overall budget. That means the cuts won't be 28%, but closer to 50 or 60%. In order to achieve that there will be decimation of "optional" services. I've heard discussion of all statutory services being removed. That includes libraries and public toilets. In Somerset, we've already seen that Arts grants have been cut by 100%.

The full impact of the cuts to Local Authority finances are yet to hit. They will fall more heavily than people currently anticipate.

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