Revenue not capital key for councils, says think tank Localis
Author: Localis |
Responding to the Spending Review and Autumn Statement 2015, Alex Thomson, Chief Executive of Localis, the leading local government think tank, said:
?The Government’s commitment to a ‘new deal’ for local government based on greater financial autonomy and greater powers is to be welcomed. In the long run this ‘devolution revolution’ will reshape the state for the better, providing room for innovative transformation in the way public services are delivered. It is a striking measure of success that local authorities will be the frontiers of delivering reform this parliament, whether that be through delivering housing, the Northern Powerhouse or an integrated health and social care system.
Having said that, as extra functions are devolved to local government and central grant is phased out, the sector will once again be asked to do more with less. By now this is a familiar challenge to the sector ? and one that so far it has performed admirably ? however local authorities have already absorbed very substantial cuts so there is a real danger that some councils will struggle to balance their budgets.
Furthermore, the Government’s focus on asking local authorities to use capital reserves and assets to continue providing services is short-sighted. It is prudent for all organisations to have some reserves to balance out variations in cash flow. They are not a sustainable source of funding, especially for local authorities for whom they would cover just a few months of expenditure. On assets, local authorities might be better placed to redevelop their land and property to generate long-term revenue streams rather than one-off receipts, as per our report Public Land, Public Good last year.
Finally, although the recognition of the ever-growing social care pressures that the sector faces is welcome, the precept will not meet the projected funding shortfall.?
ENDS
Press enquiries:
Jack Airey, Researcher
07890 318730 (mobile) or 020 7340 2660 (office) | jack.airey@localis.org.uk
Notes to Editors:
1. Public Land, Public Good
Public Land, Public Good found that councils are reacting to ongoing austerity by acting more like property developers, moving away from a mentality of simply selling buildings and land for one-off capital receipts, and instead looking to redevelop assets to derive revenue income from them that they can use to help support public services ? with the proportion of redevelopments shifting from a third of all disposals to a majority of disposals over the next 5 years.