Local councils warn of critical funding crisis as £18bn grant is scrapped

[muriel_volestrangler]

Town halls are facing a £4.1bn a year black hole in their budgets that not even the closure of every children’s centre, library, museum and park could fill, council leaders have warned.

George Osborne’s decision to axe the central government grant to councils over the next four years came in a comprehensive spending review that the Local Government Association (LGA) chairman, Gary Porter, a Conservative peer, described as a tragic missed opportunity to protect the services “that bind communities together, improve people’s quality of life and protect the most vulnerable”.

The chancellor had announced “a revolution in the way we govern this country” by giving town halls far greater fundraising powers, allowing them to keep 100% of business rates, rather than the current 50%, and increase council tax bills by 2% to pay for rising social care bills. But they will lose the grant worth £18bn across councils in England, according to the LGA.

Prof Tony Travers from the London School of Economics said Osborne’s changes were radical because they meant councils will only be able to increase revenues in the future by attracting more businesses to benefit from the changes to rates. He said it transformed town halls from “being a mini-welfare state into a local economic growth agency”.

http://www.theguardian.com/society/2015/nov/25/local-government-councils-funding-gap-critical-budget-cuts-social-care-spending-review

As always, it's once the analysis starts that you find out where the Tory attacks really hit.

[Denzil_DC]

1. Bad strategy.

If they'd pressed ahead with English devolution proposals first and installed a few mayors, they could have palmed off the blame for the cuts more seamlessly.

[muriel_volestrangler]

2. Autumn statement: IFS warns on tax rises and spending cuts

George Osborne will be forced to raise taxes or announce more spending cuts if the brighter picture of the public finances presented at the autumn statement proves to be unfounded, the Institute for Fiscal Studies warned.

In its analysis of the chancellor’s autumn statement and spending review, the IFS said around 2.6 million working families will be an average £1,600 a year worse off as a result of benefit changes.

The thinktank warned that there was a 50-50 chance of the chancellor being forced to revisit his plans.

IFS director Paul Johnson said: “He is going to need his luck to hold out. He has set himself a completely inflexible target - to have a surplus in 2019-20.”

http://www.theguardian.com/business/2015/nov/26/autumn-statement-ifs-warns-on-tax-rises-spending-cuts-george-osborne

Resolution Foundation: Osborne still hitting poor families

The think tank is warning that George Osborne has slipped out significant tax rises, on top of the surprise £27bn pick-up in the public finances from the independent Office for Budget Responsibility.

It is also reiterating its concerns that poor families will still be hit, as the universal credit is implemented in five years (meaning the tax-credit u-turn is only temporary)

The chart we ran earlier in the blog shows how the poorest are worst hit by tax and benefit changes this parliament.

According to the Resolution Foundation, the move to universal credit will cost working households £1,000 on average in 2020.

http://www.theguardian.com/business/live/2015/nov/26/euro-ecb-stimulus-autumn-statement-ifs-live#block-5656dac4e4b010de12915c02

[Denzil_DC]

3. Related:

The 9 spending review cuts Osborne doesn’t want you to know about

1. A 56% cut to government funding for local councils
2. Grants for student nurses will be scrapped
3. Housing benefit will be capped
4. Funding for energy efficiency schemes is being slashed
5. The Department for Transport gets a 37% cut
6. Funding for academies will be cut by £600m
7. Free childcare is being denied to part-time workers
8. Cuts to child tax credits will go ahead
9. The tampon tax stays

http://www.thecanary.co/2015/11/25/9-spending-review-cuts-osborne-doesnt-want-know/

It's estimated that item 3 will hit social housing tenants twice as hard as the bedroom tax.

(Some of these can be mitigated in Scotland if the powers are delegated - as happened with the bedroom tax, for instance - but it eats into the general funding pot.)