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Efficiency savings 'reaching end of the road' councils say

13/05/14

Statutory functions such as pothole repairs are likely to bear the brunt of funding cuts over the next two years, a Local Government Association survey of councils' financial strategies suggests. However one in five councils still believes next year's cuts can be met through efficiency savings alone.

Following £10 billion worth of cuts in the past three years many councils are starting to reach "the end of the road" for saving money through becoming more efficient, the association claims.

The suggests that the impact of spending reductions will start to become increasingly visible over the next two years, as councils tackle a further £10 billion cut in central government funding.

Government funding given to councils to run local services will have been cut by 40% by May 2015. LGA modelling, which factors in reduced funding and rising demand for adult social care, shows that money available to provide popular services like running gyms, parks, libraries and youth centres is likely to shrink by 66% by the end of the decade.

The LGA surveyed councils in England about their strategies for dealing with the next round of cuts. The results, set out in the Under Pressure report, show that:

- 2015/16 is the year in which three in five councils say there are no efficiencies left to be made or efficiencies alone will not be enough to tackle that year's cuts. They will be unable to meet their budget gap solely through efficiency savings.
- One in five councils believes next year's cuts can be covered by efficiency savings alone.
- Two in five councils will be looking to stem the impact of cuts by raising more income through investment, fees and charges. This could include councils increasing charges for discretionary services like leisure centres to a level where they are self-funding and less reliant on money raised through taxation.
- Almost half of councils (48%) are set to use money set aside in reserves as a short-term fix to balance budgets and delay the impact of cuts next year.

Cllr Gerald Vernon-Jackson, the LGA's vice-chairman, said: "Local government has led the way at improving and modernising the way we do things but further cuts will lead to fewer and poorer services unless government commits to a new way of working. The clock is fast running down on government's opportunity to do this before the standard of popular services really start to suffer.

"We need to find a better way to ensure public money gets to the frontline where it is most needed and doesn't get lost in the maze of Whitehall. Otherwise we risk sleepwalking into a situation where an upturn in the economy coincides with a decline in public services."

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