Cuts fears spark warning for chancellor's budget

Council finance bosses will be poised for bad news this week as the chancellor is rumoured to be considering further cuts to town hall budgets.

Tuesday, 15th March 2016, 7:00 am
George Osborne

Wigan’s authority leaders have set the borough’s budget for this year with a savings target of £60m by 2019/20.

But with George Osborne said to be considering deeper cuts to the public sector than what was first estimated, the town hall may be forced into a re-think.

Further cuts to the already struggling sector have prompted warnings from local authority leaders.

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Lord Porter, chairman of the Local Government Association (LGA), said: “Councils have more than played their part in trying to balance the nation’s books in recent years and all councils will have to continue to find substantial savings from local services to plug funding gaps over the next four years.

“Extra council tax powers and transitional funding will help some but won’t be enough to completely offset the full impact of funding pressures.

“Giving councils the option to fix longer-term funding settlements has been an important step and rightly recognised by government as being essential to give councils the financial certainty they need to protect local services. It would be perverse to then undermine this with further cuts handed down just one month later.”

The chancellor has recently said that public sector cuts might be needed to boost the economy, which is growing at a slower rate than expected.

However, Lord Porter said that instead of cutting council funding, the Government should consider “whether to tear down the ring-fence around health and education spending.”

He added: “Pumping money into the NHS while councils receive less social care and public health funding is a false economy. A properly funded social care system is essential to alleviate the pressure on the NHS.”

Wigan’s budget was approved by the borough’s councillors earlier this month, bringing with it a council tax increase of two per cent to fund adult social care.

The tax hike will raise about £2m for the council’s coffers but will not match the rising costs of adult social care.

Council finance boss Paul McKevitt has budgeted a £25m savings target for 2016/17, estimating from what the Treasury had suggested the settlement for local government would be.

He told the Evening Post in December: “We only get the full details just before Christmas and obviously we have to have our plans in place so we are making estimates to go off until then. £25m is what we think for next year and I can’t see that will change.”

A Department for Communities and Local Government (DCLG) spokesman said: “Our historic four-year £200 billion deal for councils gives them certainty to plan ahead, and ensures those facing the highest demand for services continue to receive more funding.

“By the end of this parliament councils will also be able to keep 100 per cent of local taxes, including all £26bn from business rates, providing a strong incentive to support businesses and back growth.”

The chancellor, who will unveil his plans tomorrow, has insisted “we need to act now so we don’t pay later” as he paved the way for a further financial squeeze.

Adding: “My message in this budget is that the world is a more uncertain place than at any time since the financial crisis and we need to act now so we don’t pay later. That’s why I need to find additional savings equivalent to 50p in every £100 the Government spends by the end of the decade because we have got to live within our means to stay secure and that’s the way we make Britain fit for the future.”

Jonathan Isaby, chief executive of the TaxPayers’ Alliance, said: “While the chancellor deserves some credit, much of the action which was urgently needed to bring spending down, sadly never took place.”