Pothole repairs, recycling services and adult social care could all bear the brunt of a wave of cuts expected to impact local authorities – with fears those in rural areas losing out the most.
Some councils are bracing for up to 11 per cent cuts to their budgets as Rachel Reeves prepares to slash local government spending.
The Chancellor is under mounting pressure to further squeeze public spending after official figures showed borrowing costs overshot forecasts as she tries to stick to her fiscal rules and keep the public finances on track ahead of the spring statement on Wednesday.
Figures from the Office for National Statistics released on Friday showed that public sector net borrowing was £10.7 billion in February, £4.2 billion more than had been forecast by the Government’s official forecaster, the Office for Budget Responsibility (OBR), and more than some economists had been expecting.
Borrowing over the financial year to date was up nearly £15 billion on the same period a year before, the ONS said, while spending was also up, prompting economists to warn the Chancellor faces increasingly “tough decisions” on the public finances next Wednesday.
Isabel Stockton, senior researcher for the Institute for Fiscal Studies (IFS), said the data “underscore the challenges facing the Chancellor as we head into the week of the spring statement”.
“Having boxed herself in with promises to meet her fiscal targets, not to raise taxes further and not to return to austerity for public services, easy or risk-free options for the Chancellor are in short supply,” Stockton said.
Reeves has ruled out introducing more tax rises, The i Paper understands, meaning spending on unprotected government departments – those outside of health, schools and defence – will bear the brunt of the spending restraint.
The potential for further cuts to local government funding has prompted serious jitters within government ranks with Communities Secretary and Deputy Prime Minister Angela Rayner understood to have criticised the plans in last week’s Cabinet meeting.
A Labour MP told The i Paper: “Local government has been hammered so much. People really feel local services disappearing and that just carrying on would be really, really difficult. So that’s a real danger point for us.”
County councils believe they face deeper cuts than other local authorities – up to 11 per cent over the parliament – in next week’s Spring Statement and forthcoming spending review due to a change in how the Government will fund local authorities.
Ministers are currently undertaking a review into the funding formula for councils, and authorities representing more rural areas believe the criteria will be heavily skewed towards levels of deprivation, meaning more money will be funnelled towards urban, Labour-run local authorities.
Cllr Tim Oliver, leader of Surrey County Council and chair of the County Councils Network, told The i Paper: “They are looking at how they distribute the funding as part of their new fair funding formula. Our concern is what metrics are they going to look at?
“We saw in the Budget that some ringfenced funding, called the Recovery Grant, was based solely on deprivation, while they cut the rural services grant. So if the rumours are true [that local government funding will be cut] we could be looking at cuts of up to 11 per cent over time.”
Services struggling
Councils have warned that chronic underfunding from the Government has left many services struggling, despite record rises to council tax over the last three years, insisting several frontline services will be affected with fresh cuts.
Local authorities have statutory obligations to provide for adult and child social care as well special educational needs provision, but Oliver warned that even these areas could be cut back.
“The biggest area of demand county councils face is adult social care, which is not deprivation driven,” Oliver said. “We have statutory levels we have to deliver, but there is discretion in topping those up.”
This would mean reducing the number of hours of support for those in need, at a time when “people are also losing their benefits, so we would be severely impacting their quality of life,” Oliver added.
Road maintenance budgets would also be the first to be cut, including repairing potholes and carrying out bridge maintenance, while plans for specialist education facilities will be shelved. Efforts to increase recycling will also be hit, with money for recycling centres being cut to fill funding gaps.
“It does feel as if rural communities are being put under considerable pressure,” Oliver said. “It feels as if there are certain sectors across the country that are potentially now being left behind, and that can’t be right. There has to be equality for all types of different communities, whether those are metropolitan, town, cities or rural areas.”
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A Ministry of Housing, Communities and Local Government spokesperson said: “This is untrue speculation. This government is under no illusions about the financial issues facing councils and we are determined to make progress on the inheritance we’ve been left.
“That’s why we’re allocating £69 billion to council budgets across England, reforming the funding system and bringing forward the first multi-year funding settlement in a decade, so we can deliver better public services and drive forward our Plan for Change.”
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