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NAO warns that councils are at breaking point

Published 8th March 2018

The National Audit Office (NAO) has warned that many principal councils in England are on the verge of insolvency, due in large part to cuts in central government funding of almost 50% in eight years.

Figures released by the NAO show that councils’ financial positions have “worsened markedly” since the last audit in 2014, with 10% of councils likely to exhaust their reserves by 2020. The report notes a 33% fall in the number of households with weekly bin collections, a 40.9% drop in food hygiene checks of cafes and restaurants, 48% cuts to bus route subsidies, the closures of 10% of libraries, and the issuing of 67% fewer health and safety enforcement notices. The NAO found that despite all these cuts, councils have been unable to balance their books due to funding cuts, the increased demand for social care, and costs such as the new national minimum wage. Social care costs now account for 54.4% of council spending, up from 45.3% in 2010/11.

Amyas Morse, Head of the NAO, said that currently “funding for local authorities is characterised by one-off and short-term fixes”, many coming with conditions, which “restricts the capacity of local authorities”, while the NAO report warned that trends in funding and demand for services were “not financially sustainable over the medium term.” Lord Porter, chairman of the LGA, said: “The Government needs to urgently address this cliff-edge and the growing funding gaps facing local services.”

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