The Chamberlain News

MPs slam DCLG: ‘You’ve no idea about the impact of council spending cuts’

MPs have sharply criticised the Government department led by Sir Bob Kerslake, accusing civil servants of taking a “hands off approach” and having no idea about the impact huge spending cuts are having on public services.

The House of Commons Public Accounts Committee warned that a continuation of the Chancellor’s austerity programme after the General Election could “not just undermine the entire viability of most optional services, but might threaten some statutory services”.

The PAC report stated: “The department does not understand the impact over time of reductions in funding to local authorities, and the potential risks of individual authorities becoming financially unsustainable if reductions continue.”

The PAC’s Labour chair, Margaret Hodge, said: “The Department for Communities and Local Government has overall responsibility for funding to councils. However, it takes a largely hands off approach and does not have a good enough understanding of the impact of funding reductions, either on local authorities’ finances or on services.

“It looks only at data on spending and has little information on service levels, service quality, and financial sustainability. Without at least an idea of the amount of funding required to maintain statutory services to a minimum standard, it is hard to see how the department could ensure that local authorities are able to fulfil their statutory duties.

“Looking to the future if funding reductions were to continue following the next spending review we question whether the department would be in a position to provide assurance that all local authorities could maintain the full range of their statutory services.

“The department cannot at present satisfy us that it understands whether it is feasible and practical for local authorities to deliver the service transformation necessary to maintain financial sustainability. Nor does it understand what the effects on service users would be.”

Mrs Hodge was speaking at the publication of the committee’s latest report, which was compiled after MPs took evidence from Sir Bob, who was Permanent Secretary at DCLG, Matthew Style, Director of Local Government Finance, Department for Communities and Local Government, and Sharon White, Second Permanent Secretary, HM Treasury (now the boss of media regulator Ofcom).

Sir Bob is better known in Birmingham as the author of the recent Kerslake Review into the city council’s governance abilities. The report accused the council of being a hugely dysfunctional body where councillors and officials failed to take difficult decisions and were unable to form a long-term strategic view.

Mrs Hodge and her committee, however, suggested that DCLG under Sir Bob’s leadership is badly failing local authorities.

The committee also hit out at the “unfair” grant allocation system which meant that councils serving the most deprived areas, like Birmingham, had to suffer a proportionately higher level of cuts. The city council expects to have to cut about £750 million from its budget between 2010-11 and 2017-18, with about £340 million to be identified over the next three years.

Mrs Hodge said: “Councils must cope with funding reductions of around 37 per cent between 2010-11 and 2015-16. These cuts have not hit all local authorities equally, with reductions ranging between five per cent and 40 per cent.”

The committee warned that spending cuts at unprecedented levels could have knock-on effects, giving the example of reductions in social care funding leading to “bed blocking” in NHS hospitals with elderly people having to stay in wards rather than move into care homes.

MPs said they couldn’t be certain DCLG was providing sufficient leadership to help councils meet the challenges they faced. “It is unclear whether the department is exercising a cross-government leadership role with respect to local government. It relies on data on spending and has little information on service levels, service quality, and financial sustainability.”

In his evidence to the committee Sir Bob insisted that most local authorities had absorbed grant cuts through efficiency savings that had not harmed front-line services. But the committee concluded: “The department does not use data on the level of services that authorities are actually providing, putting it in a weak position to know what the real effects of its funding reductions are on service users and other local service providers.

“Without the data the department could well consider implementing further grant reductions without understanding the impact on the level or quality of local services.”

image: Margaret Hodge, National Archives, OGL (http://www.nationalarchives.gov.uk/doc/open-government-licence/version/1/), via Wikimedia Commons