The financial health of local authorities is ‘getting worse’ due to central Government cuts, auditors say.

A new report from the National Audit Office (NAO) found councils are ‘struggling to juggle’ higher demands and cost pressures against funding cuts of nearly 50% since 2010-11.

The report, published today, warns that councils are relying on their savings to fund services and are also overspending on services - a situation it describes as ‘not financially sustainable’.

The NAO cited the increase in demand for social care as one area that was putting pressure on over-stretched councils, forcing them to divert funds from other areas.

The report found that spending on social care has decreased by 3% since 2010 - despite the increase in demand.

However, this is a small fall compared to the 32.6% reduction in spending on all other service areas.

According to the NAO’s findings, there have been reductions of 52.8% on planning and development; 45.6% on housing services; 37.1% on highways and transport; and 34.9% on cultural and related services.

The report also records how these cuts have impacted on frontline services.

Since 2010-11, 33.7% fewer households have their waste collected at least weekly, the number of bus miles subsidised by local authorities outside London has fallen by 48.4%, and the number of libraries has reduced by 10.3%.

‘Current funding for local authorities is characterised by one off and short-term fixes, many of which come with centrally driven conditions,’ said NAO head Amyas Morse.

‘This restricts the capacity of local authorities and yet the weight of responsibility to respond to increased demand and maintain services remains very much on their shoulders.

‘The Government risks sleep walking into a centralised local authority financial system where the scope for local discretion is being slowly eroded.’

Responding to the report, the chairman of the Local Government Association (LGA) Lord Porter said: ‘This stark report sets out the significant funding challenges facing all councils and the effect years of unprecedented funding reductions have had on the local services our communities rely on and other parts of the public sector.

‘It is yet further compelling evidence as to why the Government must urgently secure the financial sustainability of local government and the 1,300 different statutory duties and responsibilities councils provide.’

‘As the NAO rightly recognises, councils are having to divert ever-dwindling resources from other local services, including filling potholes, maintaining our parks and green spaces and running children’s centres, leisure centres and libraries, to try and plug growing funding gaps in adult social care and children’s services,’ he continued.

‘At the same time, they are struggling with cost pressures arising from government policies, such as paying for the National Living Wage and Apprenticeship Levy.

‘Leaving councils to pick up the bill for unfunded government policies at the same time as managing spending reduction and such growing demand for services is unacceptable.’

For more on the NAO report visit The MJ (£).