Councils could suffer decades more austerity under Government funding plans, says IFS
3 min read
Council services could suffer decades more austerity under plans to reform local Government funding, a top think tank has said.
A policy to axe general grant funding for town halls in 2020 will leave councillors forced to choose between funding social care or other services, according to the IFS.
The think tank said local authorities will depend only on council tax and business rates for the vast majority of their general funding, which is unlikely to keep pace with demand.
In a new report it explained that even with a tax hike of 4.5% a year, councils would be spending half their budgets on social care by 2035 - up from 30% today.
And even if town halls did make that cash, other services such as children's services, housing and bin collection would see real-terms cuts, it said.
IFS Associate Director David Phillips said: “With increasing demand and costs, council tax and business rates revenues are very unlikely to be enough for councils to fund both adult social care services and the other services they are expected to provide.”
He said Government will have to reverse plans to abolish general funding or plough more cash into ring-fenced grants for social care and the like.
Alternatively, he added, it could devolve more tax revenue powers including for income tax.
The report is another blow to the Government plans after the National Audit Office recently said the financial health of councils across England was getting worse and quick fixes like council tax hikes and emergency cash injections were not helping.
Local authorities have already suffered central government funding cuts of almost 50% since the formation of the coalition government in 2010.
Services around the country have seen cuts of 20% under the austerity agenda delivered since 2010.
POSTCODE LOTTERY
The IFS warned that even with much higher tax revenues social care could become a postcode lottery dependent on differing spending needs in different areas.
IFS research economist Polly Simpson said: "The government has to decide whether it thinks adult social care is ultimately a local responsibility, where councils can offer different levels of service, or a national responsibility with common standards across England."
She added: "If it opts for the latter, it cannot expect a consistent service to be funded by councils’ revenues, which are increasingly linked to local capacity to generate council tax and business rates revenues. In that case, centralised funding for social care would seem more appropriate, and could allow closer integration with the NHS, which is also centrally funded.
“But it would make England even more centralised than now, and go against the government’s devolution agenda. All in all, a difficult circle to square."
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