Councils coping with government cuts but financial cracks showing
Published by Max Salsbury for 24dash.com in Local Government and also in Central Government, Communities, Finance
Councils are coping with the Government's cuts but some are showing signs of financial stress, auditors have warned.
The Audit Commission's 'Tough Times 2012' report found that councils largely delivered their planned savings in 2011/12, and in many cases actually added to their reserves.
However, the report found that a sizeable minority had to make extra in-year cuts, seek additional funding, or restructure efficiency programmes in order to deliver their budgets.
Government funding for councils has been cut by £1.6 billion in 2012/13. Though a lot smaller than 2011/12's £3.4 billion cut, the auditors are concerned that 12% of councils are not well-placed to deliver their 2012/13 budgets. They are also concerns that 25% of those that will cope in 2012/23 may go on to struggle in the remaining years of the current Spending Review period.
Councils in the most deprived areas were most affected by the cuts, but still receive more funding per resident than less deprived areas.
The report also looks at councils' expenditure on different services; a 28% plummet in spending saw planning and development services suffer the biggest drop in 2011/12.
Child and adult social care saw the lowest average cuts, but budgets for 2012/13 showed that adult social care funding was no longer protected from major cuts, with councils planning substantial reductions.
Child social care, however, actually saw a rise in overall funding.
Metropolitan district councils were found to be the worst affected, where cuts were double those affecting county councils.
Jeremy Newman, Chairman of the Audit Commission, said: "We should recognise the significant achievement of councils in ensuring that their finances are in order, at a challenging and uncertain time for local government. On the whole, councils have worked hard to cope with reductions in funding, and have reserves available for future challenges, including further funding changes in 2013.
"However, auditors expressed concerns about a number of councils that have already shown signs of stress, and which are facing further significant challenges. Auditors should remain vigilant for any problems, while councils should continue to closely monitor their finances to ensure they remain on an even keel."