The spending review’s £3bn hit on local government

Cuts to local government grant and extra spending commitments for local authorities add up to a £3bn hit on councils

Cuts to local government grant and extra spending commitments for local authorities add up to a £3bn hit on councils, says UNISON today (Wednesday).

UNISON General Secretary Dave Prentis said: “Today was a bad day for local government. The Chancellor grabbed another £1.9bn from council budgets, at a time when they needed more money, not less.

“Next April councils will be hard pushed to find the cash for their extra national insurance pensions payments, and to ensure all contractors are paying the Chancellor’s ‘national living wage’.

“Local councils have already had to cut billions from their budgets, and now they have to dig even deeper. The closure of more essential local services is inevitable, as councils are forced to lay off thousands of experienced staff over the coming months.

“The day is not far off when councils can only afford to run the services the law demands they do. Other services will either disappear or residents will have to pay much more to use them.

“Our social care system is already in meltdown. It needed a desperate injection of cash today, but all that happened was George Osborne passed the buck to local taxpayers.

“Forcing local councils to raise council taxes locally to put more cash in social care will create a postcode lottery, where more deprived areas have less to spend than wealthier ones.

“Similarly allowing local councils to raise and spend their own business rates means yet more uncertainty, and also risks widening the gap between income-rich and income-poor areas.“

Notes to editors:

Next April, the current 1.4 per cent national insurance rebate for employees and 3.4 per cent for employers will be abolished. It means earnings could drop by around £22 a month for those on a £25,000 annual wage, and the wage bill for councils could rise by £800m a year.

Similarly next April local authorities need to make sure that all its contractors are paying all staff over the age of 25 the ‘national living wage’ of £7.20 an hour. This means finding an extra £330m, just in residential and social care.

Table 2.17 on page 100 of the spending review shows a £1.9bn reduction in local government spending in 2016/17.