Local authority spending

The London Intelligence – Issue 8

Local authority spending

One year after our first local authority spending special, new data shows that cuts to services delivered by London’s local authorities has continued. London councils have little capacity to raise their own revenue, with power and funding concentrated at the central government level. The pressures of funding reductions and rising demand has required London’s local authorities to innovate, though the impact of cuts are increasingly seen in frontline services.

Overall expenditure

Total budgeted service expenditure (excluding education, public health and police services) by London’s 33 councils fell from £7 billion in 2010/11 to just over £6.5 billion in 2018/19, a fall of eight per cent. When taking population growth into account, budgeted spending per head fell much steeper, from £879.42 in 2010/11 to £729.10 in 2018/19, a fall of 17 per cent. When inflation is taken into account the fall is nearly 35 per cent.

While local authorities spent less than they budgeted in 2011/12 and the following three years, that pattern has been reversed since 2015/16, indicating tighter fiscal circumstances, and greater pressure on reserves.

Council budget change, per head

Figure 26 Council budget change

Even without accounting for inflation, almost all boroughs have seen significant reductions in budgeted expenditure per head since 2010/11. Just as cuts have fallen hardest on higher spending urban councils nationwide, it has been some of London’s previously highest spending inner city local authorities –including Westminster, Newham, Tower Hamlets, Hackney, Camden and Wandsworth– that have seen per capita cuts of 25 per cent and above.

*Figures from the City of London Corporation have been excluded, as their unique nature makes for difficult comparison.

Spend by service area

Breaking down budgets by service area shows declines in every principal service area, with the exception of children’s social care, though social services spending has recently picked up slightly. Between 2010/11 and 2018/19, planning and development services budgets saw the biggest per capita decline at 59 per cent, followed by highways and transport at 54 per cent. Cultural and related activities budgets also dropped – by 42 per cent.

Local authorities have been directing scant resources to core statutory services.
The government has also intervened to support social care, which accounts for an
increasing proportion of budgets, rising from 54 to 62 per cent of the expenditure
covered in this survey between 2010/11 and 2018/19. With demand driven by the
growing needs of an ageing population and pressure on the NHS to free up beds, the government has allocated more grants to support social care and boroughs have also been able to charge an additional adult social care precept on top of council tax. As a result, adult social care budgets, which have declined over the long term, increased by ten per cent between 2016/17 and 2018/19. Children’s social care budgets increased by five per cent over the same period.

Guy Ware

Planning and development services

Despite the increase in demand implied by London’s housing delivery target increasing from 25,000 to 43,000 units in 2015/16, and a new target of 65,000 homes being proposed in the draft London Plan, local authorities have seen significant cuts to their planning and development control budgets.

Detailed analysis indicates that spending reductions have been achieved primarily through reducing expenditure with income remaining broadly steady (from planning fees, planning performance agreements etc). However, as the graph shows, outturn expenditure has been higher than budgeted very year, reflecting the demands on these services. Although actual spending increased by 18 per cent between 2016/17 and 2017/18, budgets declined by nine per cent between 2017/18 and 2018/19.

Pooja Agrawal