Andrew Jepp 04 December 2014

The risk of cutting services

Despite the Office of Budget Responsibility (OBR) upgrading its projection for UK growth to 3% this year, local authorities will still be feeling the effects of substantial budget cuts. This Autumn Statement will do little do hearten their mood, with scant concessions for councils that are already feeling stretched.

As a recent report by the National Audit Office (NAO) shows, austerity is already impacting on service provision. With the Chancellor emphasising the need for substantial savings in public spending in the Statement the situation looks set to continue and potentially worsen.

Councils have so far been able to protect their bottom lines from the effects of cuts, but that has meant service reductions in frontline areas such as community safety and traffic management.

With the cuts expected to continue well into 2018, councils will increasingly face difficult choices over what services they are feasibly able to cover. The big risk to local government is that as they reduce services, they expose themselves to new reputational, operational and financial risks in these areas.

As belts are tightened and councils dig further into their reserves, impacts may also be felt on core services such as social care.

In the medium term, over half of councils are in a weak financial position. To tackle the problem, local government has asked the Chancellor for more devolution in England, matching the proposals made for Scotland by the Smith Commission.

While he said he would welcome other cities following Manchester’s lead, the Chancellor’s comments did little to address the radical reforms many local authority chiefs believe is necessary to counteract spending reductions

More grass roots power is just one piece of the jigsaw, irrespective of today’s measures, senior leadership teams will also need to drive innovation and integration in the services they provide in order to meet their targets. Last week’s report from the independent Service Transformation Challenge Panel is a step in the right direction, we look now to see how the Government responds.

Andrew Jepp is director of public sector at Zurich Municipal

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