Chair's statement: Financial sustainability of local authorities

"Although local authorities seem to be balancing their books in the face of a 37% cut in government funding, I’m worried that what is really happening to local services is not understood, with potentially disastrous consequences.

I find it extraordinary that the Department has little clue if local authorities are at risk of financial failure and whether the funding each authority gets is enough to meet demand for services. This is at a time when local auditors are unsure if more than half (52%) of authorities with social care responsibilities will be able to deliver their financial plans in the next few years. 

Worryingly, local authorities with the highest level of deprivation have seen the biggest cuts, potentially putting vulnerable people at risk. It is authorities with high cuts which have seen the biggest spending reductions for social care services. Between 2010-11 and 2014-15, local authorities with a high cut in spending power had reduced their funding for adult and children’s social care by 12.7% and 4.3%. This is compared with authorities that had low cuts which had reduced funding for adult social care by 1.2% but had increased spending on children’s social care by 14.8%.

I look forward to hearing how the Department for Communities and Local Government plans to get better information about what is really happening to services in local areas and how it will ensure authorities’ ability to deliver essential services is not at risk when they appear before my committee on 26 November."

Further information

• National Audit Office report: Financial sustainability of local authorities 2014
• National Audit Office report: The impact of funding reductions on local authorities
• About Parliament: Select Committees
• Visit Parliament: Select Committees