Policy Hub
On 23 March 2010, the Audit Commission published the third in a series of publications looking at the impact of the credit crunch and subsequent recession on local authorities. This report argues that councils must think bigger and act quicker to reduce costs or funding cuts will cause more damage to services and jobs than is necessary.
The report notes that most councils have been cushioned from the worst of the recession because the government stuck to its three-year funding settlement. However, this ends in 2011. On average, two-thirds of councils’ income presently comes in the form of assorted government grants. The largest is the Dedicated Schools Grant followed by the Formula Grant.
Even though the timing and extent of cuts in government support are unclear, the report says that councils must prepare now for leaner times. The best prepared councils are taking action now to preserve services in the years ahead, but others have yet to make any financial plans beyond 2011.
Surviving the crunch: local finances in the recession and beyond (PDF)