Tiffany Cloynes 11 July 2017

Cutting services: a false economy?

As local authorities continue to face pressures on their budgets, some may try to cut costs by reducing services to provide only those which they have an absolute legal obligation to provide. However, it requires careful thought to establish exactly which services are essential and the extent of service provision which is required.

And is this actually a false economy, as discretionary services can supplement essential services and generate income for local authorities?

A local authority which is considering whether it can reduce the services which it offers must first identity which services it is obliged to provide. Local authority services which must be provided include education, care services, library services and waste services.

The obligations on individual councils to provide such services depends on the local government arrangements which apply in a particular area. A unitary authority is responsible for all local authority services in its area, whereas in a two-tier area some services would be delivered by a county council and some by district councils. By contrast, a local authority has a power but not a duty to provide recreational facilities and to establish a civic restaurant and to provide other discretionary services.

Even where a local authority has a duty to provide a particular service, there is usually some flexibility about exactly what services are provided and how they are provided, depending on the particular statute which imposes the duty.

For example, the Public Libraries and Museum Act 1964 requires library authorities to provide 'a comprehensive and efficient library service' for all persons who desire to make use of it and specifies particular factors to which such authorities must have regard.

However, the Act does not specify exactly what services a library authority must provide in order to comply with its duty. This means that a local authority has flexibility as to how it complies with its duties, allowing it to make effective use of its resources and deliver good quality services.

When a local authority considers whether there is scope for it to stop providing or to reduce the provision of particular services, it must comply with any obligations to consult service users. These may be imposed by statute or may arise because a local authority has created an expectation of consultation.

In order for consultation to be meaningful, it must be carried out when proposals are still at a formative stage and so there is scope to influence their final form. Those who are consulted must be given sufficient information and time to allow them to make meaningful contributions to the consultation. The results of consultation should be taken into account when the local authority takes its final decision about service provision.

Failure to comply with any obligations for consultation or any other legal requirements will make decisions of local authorities vulnerable to challenge.

Local authorities should consider whether providing discretionary services will give them opportunities to generate income. Section 93 of the Local Government Act 2003 gives local authorities power to charge for providing discretionary services. This cannot be used to raise income which exceeds the cost of providing the service. Therefore this power cannot be used to make a profit.

However, section 93 does not specify how costs must be calculated, which means that local authorities can recover the full costs of service provision. This power can therefore be used to develop a strong infrastructure for the provision of discretionary services, which can help with the effectiveness of service delivery generally.

Local authorities should therefore be careful when making cuts to services. They must be sure that they have the power to make their proposed cuts and that they comply with any legal requirements in doing so. They should also be satisfied that the potential loss of opportunity to raise income to support service provision does not outweigh the benefits of the savings. Local authorities should only reduce services if they can do so lawfully and if this makes economic sense.

Tiffany Cloynes is partner and head of public services in England for Geldards LLP

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