What does the fiscal and funding outlook for English councils look like? In this presentation for the LGA's annual finance conference, IFS Associate Director David Phillips looked at recent trends, the future outlook, and interactions with funding reforms.
It shows how cuts to councils' overall funding levels have ended, as bigger council tax increases and extra ring-fenced funding for social care offset cuts to general grant funding. However, this follows large cuts in the early 2010s and takes place in the context of rising spending pressures.
Looking to the future, these pressures look set to continue - not least for adult social care services - and local tax revenues are unlikely to keep pace with these. In the context of funding reforms which replace grant funding with more local tax revenue, this could mean a continuing squeeze on services even with significant increases in council tax over the next decade.
Decisions over future funding arrangements will also have big implications on how funding is distributed around the country, and hence the services available to people living in different areas. 2019 is therefore a big year for decisions on council funding, which will have important ramifications for the 2020s and beyond.
Authors
David Phillips
David is Head of Devolved and Local Government Finance. He also works on tax in developing countries as part of our TaxDev centre.
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