Despite recent scare stories, councils are well placed to ride out the immediate effects of the credit crunch, according to new Audit Commission research.
The watchdog today published a study of council finances which shows that most local authorities anticipated the increased costs, and loss of income to some extent. The research, Crunch Time, also shows they have adequate reserves to cushion the estimated £2.5 billion impact, and are taking action to cut costs.
The Audit Commission survey is very recent. It questioned chief financial officers in English local authorities between mid October and November 2008, worked with seven case study local councils and analysed data on inflation and patterns of local authority spending. In addition it examines a number of factors that have combined to help local authorities through some of the challenges that they have been facing this financial year, specifically the recent drop in fuel prices and falling inflation and interest rates.
Steve Bundred, chief executive of the Audit Commission said:
'After all the doom laden headlines, I think facts like this help to inject a little realism. While councils are in the firing line and undoubtedly face some very tough choices in the longer term, they should keep a sense of perspective. By and large councils knew this downturn was coming and have planned for it. The pressures are real but councils are coping with them well.'
The commission's findings show that:
- Two thirds of councils are reporting increases in applications for housing and other benefits as a direct result of the downturn.
- A quarter of England's councils have seen increased demand for elderly care
- One in ten councils are experiencing increased demand for state school places - often as parents pull their children out of private schools
- One in seven has made compulsory redundancies, or plans to do so.
- Many councils are reviewing recruitment, or seeking savings by leaving posts unfilled.
Notes to editors
- The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone.
- Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers, auditing the £200 billion spent by 11,000 local public bodies.
- As a force for improvement, we work in partnership to assess local public services and make practical recommendations for promoting a better quality of life for local people.
FOR FURTHER INFORMATION PLEASE CONTACT:
MARK NICHOLSON, Direct line 0844 798 2128 / 0207 166 2128 (24 hour), Mobile 07813 038132, E-mail m-nicholson@audit-commission.gov.uk