It seems that nothing makes headlines like bin collections, but despite deep spending cuts neighbourhood services have only suffered a slight decline in public satisfaction across England. Spending has been cut sharply over the past eight years, though the pace of cuts slowed last year following a temporary cash boost for local authorities.
Councils have managed the cuts by delivering neighbourhood services more efficiently: reducing spending on staff and asking them to do more. Where that has not been enough they have, in some cases, charged users more or scaled back the services they provide – such as reducing the number of libraries and the frequency of bin collections.
Public satisfaction with neighbourhood services has declined only slightly, while regulatory services like health and safety and food hygiene have become more effective. But a lack of data on staff morale and demand for services means we cannot say whether the current level of spending is sustainable, or whether local authorities are leaving some demand unmet.
Following the extra funding announced in the 2019 spending round, local authorities should have enough money to meet future demand for neighbourhood services, although they may choose to use these extra funds to increase spending on social care for adults and children, while continuing to squeeze neighbourhood services.
Aside from social care for adults and children (discussed in the previous two chapters), local authorities also provide a range of neighbourhood services, including transport, housing, waste collection and planning. In England these services are delivered by the 353 unitary, London, metropolitan district, shire district and shire county local authorities. These services are funded in part by central government grants and in part by locally raised revenues.
Central government puts legal obligations on local authorities to do certain things, such as to provide “a comprehensive and efficient library service”. The last comprehensive count (conducted in 2011) found that Whitehall placed 1,338 legal obligations on local authorities.
Central government also decides how much grant funding local authorities receive, which taxes they can levy and how much they can vary the rates of those taxes.* Within these constraints, local authorities make tax and spending decisions: as long as they deliver their statutory duties, they can spend as much or as little as they choose on each of the services within their remit.
While neighbourhood services make up an important part of what local authorities do, it is difficult to understand what the impact of cuts has been on these, as the government no longer collects much nationally comparable data on them.** For example, in 2018 the National Audit Office (NAO) found no data with which to assess the effect of spending cuts on community centres, economic development, traffic management or tourism.
In this chapter, we focus on seven neighbourhood services for which some England-wide comparable data is available: food safety; health and safety; libraries; planning; road maintenance; trading standards; and waste collection. The major areas of neighbourhood services that we do not include here are: homelessness services and housing benefit; archives and museums; maintaining parks and open spaces; and other transport services (primarily street lighting and buses).
*For example, local authorities cannot raise council tax by more than 2% without holding a referendum.
**The coalition government reduced the number of statutory duties and some performance targets, including local area agreements and the National Indicator Set. See Ministry of Housing, Communities and Local Government, ‘Councils’ red tape cut as 4,700 Whitehall targets slashed’, press release, 14 October 2010.
There has been a large decline in day-to-day spending* on the seven neighbourhood services covered in this report. Between 2009/10** and 2017/18, local authorities cut spending by 28.1% in real terms – with some services taking more of a hit than others.
Over the past eight years, local authorities have prioritised spending on social care for adults and children, at the expense of spending on other services; the share of total local authority spending that went on these rose from 52% in 2009/10 to 64% in 2017/18.
Spending on some neighbourhood services has been cut more than others. Since 2009/10, libraries have experienced the largest real-terms day-to-day spending cut (41.2%), followed by trading standards (38.8%), road maintenance (29.1%), health and safety (28.5%), food safety (27.5%), planning (20.0%) and waste collection (19.5%).
Reductions in day-to-day road maintenance spending were partially offset by increases in capital spending – the almost-30% cuts were balanced by a 4% real-terms increase in local highways and transport capital spending since 2009/10, some of which might have been used to reduce the need to spend on maintenance.*** The Department for Transport estimates that total local road maintenance spending has declined by 14.1% since 2009/10, only half of the cut shown above.
All local authorities have experienced cuts but, on average, these have been larger in more deprived areas.
This is because the component of local government income that has been cut most sharply over recent years is the revenue-support grant from central government, which on average makes up a larger share of income for councils in more deprived areas. Between 2013/14 and 2018/19, the grant was cut by 91.6% in real terms, or in cash terms from £15.2 billion (bn) to £1.4bn.
*These figures double-count some local authority spending where one local authority pays another to provide a service. Our figures may therefore slightly understate or overstate the decline in spending between 2009/10 and 2017/18, if these arrangements have become more or less frequent.
**The 2009/10 spending figures include some revenue expenditure funded from capital by statute (RECS), which was not included in future years. Our figures may therefore slightly overstate the decline in spending between 2009/10 and 2010/11. We cannot say by how much because RECS is not allocated to individual services. See Comptroller and Auditor General, Financial Sustainability Of Local Authorities 2018: Methodology, National Audit Office, 2018, p. 18.
*** The Department for Transport’s 2014 guidance on highways maintenance states that both capital and revenue can be used for maintenance. See Department for Transport, Gearing Up for Efficient Highway Delivery and Funding, The Stationery Office, 2014, p. 10.
Another consequence of the cut in central government support is that people who use local authority services are paying more for them. This has happened as councils have been incentivised to look elsewhere for funding. Local authorities have increased council tax and introduced charges for services which were previously free – such as waste collection. The outcome is that local taxpayers are now shouldering more of the cost of the services they rely on, something which is likely to continue.
Between 2013/14 (when council tax benefit localisation and business rates retention were introduced) and 2018/19,* the share of local authority spending** financed from council tax increased from 38.9% to 49.1%.
The coalition government’s policy of providing money for councils to freeze council tax initially allowed councils to keep council tax bills near-flat in cash terms. The average Band D council tax bill – the standard measure of council tax, relative to which other bands are defined – was £1,468 in 2014/15, compared with £1,414 in 2009/10 – this equates to a 4.4% fall in real terms, after accounting for economy-wide inflation. But shortly before the central funding for council tax freezes ended (2015/16), the average Band D bill began rising; it reached £1,591 in 2017/18, a real-terms increase of 3% from its 2014/15 rate.
After 2016/17, some local authorities used the social care precept – where the government allowed local authorities responsible for social care to raise rates above the threshold for which they would ordinarily have to hold a referendum*** – to increase council tax further. This additional revenue is nominally ringfenced to spend solely on adult social care, with local authority finance officers required to confirm to the government that they are spending the money on this. But in practice there is more flexibility, because the government cannot know how much local authorities would have spent on adult social care without the additional precept funding.
In addition to raising council tax, most local authorities now charge people and businesses for services they once provided for free, but must spend any revenues raised on that service. Local authority income from sales, fees and charges**** rose from £9.3bn in 2009/10 to £10.5bn in 2017/18, an overall share increase of 13.3% to 15.8%.
These income streams provide a greater share of funding – 20.3% in 2017/18, up from 13.6% in 2009/10 – for the seven services we focus on in this chapter. The largest increases have been in planning and waste collection, where the share of spending financed by charging has increased by 18.2 and 4.4 percentage points respectively.
Over half of local spending on planning (54.4%) was derived from fee income in 2017/18, compared with just over one third (36.2%) in 2009/10. Local authority planning departments have increased the revenue they generate from developers by increasing planning fees,***** and offering developers discretionary services such as pre-application advice and planning performance agreements, where developers pay councils to allocate resources to their application to process it faster.
The Royal Town Planning Institute (RTPI), the chartered institute for professional planners, worries that greater reliance on fees shows that local authorities have prioritised development management over strategic work and planning policy. Local authorities’ increasing reliance on fees may raise the risk that they prioritise providing services to developers with money to pay for those discretionary extras.
Local authorities responsible for waste collection have primarily charged for services beyond residential bin collection. The number of authorities charging for garden waste collection rose from 88 to 199 between 2010/11 and 2018/19, while the number offering the service for free fell from 236 to 118.
Charging local citizens and businesses for services is likely to continue. A 2019 Local Government Chronicle survey of local government officers found that 72% expected to increase commercial revenues over the next three years.
*The introduction of council tax benefit localisation and business rates retention in 2013/14 means it is not possible to compare the share of local authority spending financed from grants and locally raised revenues before 2013/14.
** We define local authority spending as total spending excluding government grants ringfenced for schools (dedicated schools, pupil premium, education services and universal infant free school meals) and for the police. See Ministry of Housing, Communities and Local Government, ‘Local authority revenue expenditure and financing’, GOV.UK, 2019, www.gov.uk/government/collections/local-authority-revenue-expenditure-and-financing
*** The government allowed social care authorities to add up to 2% per year to the council tax rate above the referendum threshold from 2016/17 to fund adult social care. The government then increased this to 3% per year in 2017/18, although no authority was allowed to increase council tax more than 6% above the threshold over the three years from 2017/18 to 2019/20.
**** We exclude education, the police and fire authorities because they are not controlled by local authorities, and exclude public health as local authorities only became responsible for it in 2013/14.
***** Planning fees have increased twice since 2010, in 2012 and 2018.
There is no sign that demand for neighbourhood services has fallen as local authorities have cut spending. As the population rises, demand for many services will continue to increase at roughly the same pace. Put simply, more people means more bins – and more bins means more collections.
As the number of people in England increased by 6.4% between 2010 and 2018, a number of neighbourhood services will have faced greater demand. But this is not uniform: for some services like parks and green spaces, one person’s use or enjoyment is not much affected by others’, so demand may not have risen as closely in line with the population.
Most direct indicators of demand for specific services also suggest demand is rising:
- The total number of miles travelled by motor vehicles in England rose by 8.2% between 2010 and 2018, implying a greater need for road maintenance.
- The number of food businesses in England rose by 7.2% between 2009/10 and 2018/19, implying a greater need for food inspections.
- The total number of planning applications submitted in England rose by 0.8% between 2009/10 and 2017/18, implying a greater need for planning officers.
One strategy councils have used to deliver large spending cuts is to reduce staff numbers. In 2013, the Audit Commission found that reducing the number of staff was the most common strategy that councils used to manage financial constraints: 96% of single-tier and county councils and 86% of district councils cut their numbers of staff between 2010/11 and 2013/14.
Staff numbers have been massively reduced across a range of services such as libraries, health and safety inspections, and planning. Remaining staff have had to pick up an increased workload – and there have been some reports of a subsequent decline in morale.
Local authorities have made large reductions in staff numbers in libraries. Between 2009/10 and 2017/18, the number of full-time-equivalent (FTE) library staff fell by 37.9%. Staff cuts fell disproportionately on professional librarian posts rather than on administrative and clerical posts: 14% of paid staff occupied professional posts in 2016/17, compared with 20% in 2009/10. To compensate, local authorities have made more use of volunteers. By 2017/18, there were 187.1% more library volunteers than in 2009/10, contributing 220% more hours.
The government does not collect data on the number of planners employed by local authorities, but independent estimates suggest that their number has also fallen. A survey of 95 local authorities by Planning Futures, a planning think tank, found that, on average, the number of FTE planning staff in local authorities fell by 10.2% between 2011 and 2016, from 28.4 to 25.5.
The number of staff in regulatory services declined faster than in both libraries and planning. The number of professionally qualified food standards and food hygiene staff in England – workers who investigate complaints, inspect businesses and enforce compliance through licensing* – declined by 56.1% and 16.1% respectively between 2009/10 and 2018/19. The number of FTE trading-standards officers fell by 56% between 2009 and 2016 (from 3,534 to 1,561). The number of health and safety inspectors in Britain (there are no figures separately for England) – who investigate and enforce health and safety law – declined** by 52.4% (from 1,050 FTE to 500 FTE) between 2009/10 and 2017/18.
Staff cuts have meant that the remaining staff have higher workloads. Food hygiene and food safety inspectors are covering more businesses: the number of professionally qualified staff per 1,000 food establishments declined from 4.4 in 2009/10 to 3.0 in 2018/19. On average, food hygiene staff in English local authorities completed 275 interventions each in 2018/19, an increase of 23 since 2009/10. Food standards staff completed 384 interventions each in 2018/19, more than double the number of interventions undertaken by each member of staff in 2009/10.***
We cannot count the number of staff members employed to deliver road maintenance or waste collection services because official statistics exclude staff working for outsourced providers, which carry out a lot of both services.
Local authorities are struggling to recruit staff. Although we do not know whether these problems worsened as spending cuts deepened, there are some indicators:
- Local authorities told the NAO that they struggled to recruit and retain enough qualified food safety and food hygiene staff in 2019.
- Over half of local authority planning departments in the south-east and north- west who responded to a 2017 RTPI survey said that they had difficulties recruiting and retaining planners. A 2019 survey of planning departments found that local authorities who responded were, on average, failing to recruit as many planners as they had intended.
- A 2015 report commissioned by the Department for Business, Innovation and Skills (BIS), noted that local authorities reported that spending cuts in trading services had reduced morale.
- BIS’s successor department – the Department for Business, Energy and Industrial Strategy – told the NAO in 2018 that it believed trading standards were a “high-risk area in the medium term” due to cuts.
* Food standards staff assess issues which could mislead consumers; food hygiene staff assess issues which could harm consumers.
** Adding together the number of trading standards, health and safety, and food standards/hygiene staff may overestimate the numbers and give an inaccurate picture of the change in numbers, as there is some overlap between staff holding these professional qualifications.
*** Part of this larger increase in food standards interventions may be due to better reporting of intelligence- gathering activity, and unique in-year factors. There was a large increase in sampling in 2013/14 due to the horsemeat scandal, and a large increase in advice and education activity in 2014/15 due to new EU regulations coming into force, for example.
Neighbourhood services have also seen cuts to equipment and hardware budgets – though these are not as easy to identify as the drop in staff numbers. Non-staff costs make up between 35% and 75% of spending on neighbourhood services. Road maintenance, for example, often requires specialist equipment, and libraries require fixed or mobile sites.
Non-staff costs made up 72.3% of waste collection spending in 2017/18; 55.8% of total library spending; 53.2% for planning; 37.8% for health and safety; and 35.4% for trading standards.
Unfortunately, for most neighbourhood services, no data is available on the type and volume of non-staff inputs that they use. The exception is libraries, where it appears local authorities have reduced their lending stock. Libraries’ total lending stock – including books, CDs, DVDs and e-books – fell by 23.1% between 2009/10 and 2017/18. Libraries have not replaced books on a like-for-like basis as some have been removed from circulation.
There has also been a decline in the number of libraries, which fell by 16.8% between 2009/10 and 2017/18. Where libraries remain open, more are being run by communities rather than by local authorities. Local authorities directly managed 77% of all libraries in 2016/17 compared with 89% in 2012/13, the only years for which data is available. At the same time, the share of community-managed libraries – those staffed by volunteers – increased from 4% to 9%.*
Communities look set to continue taking on more responsibilities: only 13 of the 23 new libraries opened in 2016 were run by councils, compared with 21 out of 24 in 2010.
Waste collection and libraries provide the clearest examples of service cuts: local authorities are collecting rubbish less often, and libraries are open for fewer hours than they were in 2010.
The number of councils providing weekly residential waste collections fell by over 40% (from 155 to 72) between 2010/11 and 2018/19. But regular waste collection has not been replaced by more frequent recycling collections; between 2013/14 and 2018/19, the only years for which data is available, the number of councils providing weekly dry recycling collections also declined, albeit less drastically (from 76 to 73).
Libraries are now open for fewer hours. Excluding mobile libraries, the share of libraries open 30 hours or longer each week in 2017/18 was 58.1%, lower than the 63.8% in 2009/10. Libraries may be able to provide some services online without opening – lending e-books rather than physical books, for example – but these are unlikely to have fully compensated for the decline in opening hours.
* The remaining 14% of libraries in 2016/17 were “community supported co-produced libraries” and “commissioned community co-produced libraries”, which were jointly managed by local authorities and local communities.
There have been some areas where local authorities can point to successes: planning applications and road maintenance, in particular. Local authorities have managed to increase the number of planning applications they process by 3.3%, from 417,606 (2009/10) to 431,201 (2017/18).
The actual rise in planning work may be faster, as a larger share of planning decisions are now on major applications, which require more time to assess. The number of major commercial and residential applications that local authorities decided increased by 41.2% between 2009/10 and 2017/18, while the number of minor applications increased less quickly, by only 16.0%.*
The increase in decisions is partly a response to applications received. Local authorities must process applications within statutory timeframes – if they do not, planning applicants can appeal to the secretary of state for the Ministry of Housing, Communities and Local Government to make the decision.
Local authorities have continued to maintain the same number of roads each year even though spending fell. Between 2009/10 and 2017/18 the number of miles of B, C and unclassified roads – smaller roads connecting areas, and residential roads – receiving some maintenance in a year fluctuated but remained broadly flat. The number of miles of A roads – major roads connecting areas – receiving maintenance also remained broadly flat.
But the type of maintenance local authorities are doing has changed. Local authorities have prioritised major works at the expense of routine preventive work. Spending on structural maintenance – such as repairing bridges and underpasses – fell by only 2.7%, but for routine and other maintenance – such as clearing drains and replacing signs – the fall was 30.2%. In response to a 2014 NAO investigation, local authorities confirmed that they were carrying out less routine road maintenance; those responding to a separate Transport Select Committee inquiry in 2019 accepted that neglecting routine maintenance may mean they have to spend on extensive repairs later.
* Residential and commercial applications both fell during the 2008 recession. Residential applications recovered and are now comparable to pre-recession levels; commercial applications have stabilised at a rate lower than the pre-recession period. See Ministry of Housing, Communities and Local Government, Planning Applications in England: April to June 2018, 2018, pp. 2, 11–12.
In regulatory services, local authorities have prioritised their efforts on the most critical interventions – inspecting the businesses that are most likely to harm consumers. In single-tier local authorities, which have responsibility for both food hygiene and food standards, they have prioritised investigating the most serious issues that could actively harm consumers (food hygiene) over issues that could mislead them (food standards).*
The share of food hygiene interventions completed on time declined by only 0.3 percentage points between 2009/10 and 2018/19; but has consistently remained above 80%.
In contrast, the timeliness of food standards interventions has deteriorated markedly: the share of such interventions that are completed on time has fallen from a high of 62% in 2010/11 to just 36.8% in 2018/19. Food standards officers told the NAO that “food hygiene controls [tend] to get prioritised over food standards controls because the impact of food hygiene failures are more visible”.
Local authorities have also prioritised intervening in the highest-risk establishments – those where inspectors are most concerned about food processing, contamination risk and management quality – in both food hygiene and standards. As such, the largest reductions in the timeliness of inspections have been in the lowest-risk establishments. This is a sensible way to prioritise resources – but it risks local authorities losing chances to gather intelligence and intervene before problems worsen or spread.
The number of food samples taken by local authorities – which they use to survey markets and identify emerging risks – fell by 34% between 2012/13 and 2017/18.
Health and safety teams have also prioritised inspecting the riskiest businesses. Between 2009/10 and 2017/18, the total number of annual health and safety visits carried out in Britain declined by 52.8%. Proactive (planned) inspections were almost entirely eliminated over this period – the number of proactive inspections that took place in 2014/15 was just 4.6% of the 2009/10 number, the only time period for which we have consistent data. There was a smaller decline over the same period (28.3%) in the number of reactive visits (those following requests or complaints).
This reduction in part reflected a response to a new national enforcement code set out by the Health and Safety Executive – the body that monitors local authority regulation and enforcement – in May 2013, which was designed to improve the use of limited resources. The code explicitly told local authorities to “target interventions on those activities that give rise to the most serious risks or where the hazards are least well controlled [and] not invest limited resources on matters of comparatively low risk”.
The government does not collect data on trading standards activities, but local authority respondents to a 2015 study reported a similar picture. They stated that most work they undertook was now “reactive (complaint driven)”, and that they had cut services such as Citizens Advice centres and educational work in schools.
* Food hygiene inspections are typically led by environmental health teams – and food standards inspections by trading standards teams. In two-tier local authorities, environmental health teams are run by district councils, while trading standards teams are run by county councils.
Despite spending reductions across neighbourhood services, public satisfaction has only slightly declined. Polling commissioned by the Local Government Association shows that overall satisfaction with councils fell by nine percentage points between September 2012 and June 2019, from 72% to 63%.
When asked about specific neighbourhood services, there was a similarly small decline. Between September 2012 and June 2019, public satisfaction with waste collection fell by nine percentage points (from 83% to 74%); as did satisfaction with libraries (from 67% to 58%). Satisfaction with road maintenance is eight percentage points lower than in September 2012, but has steadily increased over the last year.
These figures suggest that where the public has noticed a reduction in the quality or availability of these local services, it has been far less than the scale of spending cuts.
It is harder to judge the other four neighbourhood services we cover. The proportion of planning applications approved, and the proportion decided within target timeframes, have increased. The percentage of both minor and major applications decided within an agreed time limit were higher in 2017/18 (85% and 89% respectively) than they were in 2009/10 (79% and 71% respectively).
The percentage of decisions made within time limits rose rapidly after 2012/13, following the introduction of new performance targets in the 2013 Infrastructure and Growth Act, which allowed the Planning Inspectorate to intervene and make decisions where local authorities were not deemed to process applications quickly enough, or decisions had been repeatedly overturned at appeals.
This apparent improvement in timeliness is also partially due to more frequent use of agreements to extend timeframes.*
The quality of decisions reached – as measured by the share of local authority decisions that are successfully appealed – seems to have stayed roughly constant over this period: there was not a notable change in the percentage of decisions that were overturned at appeal between the second quarter of 2016 and the first quarter of 2018,** the only years for which the government published data.
There is some data on the level of compliance that regulatory services achieve – the proportion of people or businesses following the rules, and numbers of people (not) coming to harm as a result. The share of ‘broadly compliant establishments’ – businesses with a food hygiene rating of 3–5 out of 5 – increased from 82.1% in 2009/10 to 90.3% in 2018/19. The number of incidents of food poisoning contracted domestically and reported to Public Health England also fell by 66.4% between 2010 and 2018, from 10,640 to 3,576.
There is no data on compliance with health and safety rules or trading standards, but we do know that the rate of non-fatal workplace injuries fell between 2009/10 and 2017/18, whether measuring injuries reported by employers (a fall of 46.0%) or by employees (a fall of 31.4%), suggesting that businesses have become more compliant with health and safety law.***
Local authorities appear to have maintained the overall quality of the A, B, C and unclassified roads they manage, though some improvement in the quality of major roads has been offset by a deterioration in the condition of lesser-used ones.
The Department for Transport reports that the share of A roads that should be considered for maintenance reduced from 5% in 2009/10 to 3% in 2017/18, while the equivalent figures for B and C roads were 9% and 6% respectively. The Asphalt Industry Alliance’s more detailed estimates of the condition of local roads also show an improvement. The share of local roads in poor condition – where the “road condition has deteriorated beyond a level which addressing surface issues only can remedy” – was 19.7% in 2018/19, less than in 2011/12 (the earliest year for which it collected data) when the figure was 22.0%.
However, the share of unclassified roads – which are typically used less and often residential, but make up more than half of the network by length – that should be considered for maintenance increased from 15% in 2009/10 to 17% in 2017/18. The decline in the quality of these roads may help reconcile why the quality of A, B and C roads appears to have improved since 2010, but road users report having worse experiences, such as suffering more frequent cycling injuries and making more insurance claims for pothole damage.
Local authorities are now managing to make their money stretch a lot further in neighbourhood services than they did eight years ago. Despite real-terms cuts of between a fifth and two fifths to spending on the seven neighbourhood services we have examined, local authorities have managed to maintain service provision and performance in most areas. Even where services have been cut back – notably libraries and waste collection – the scale of reduction is not as large as might have been expected and residents’ satisfaction with the services has declined only slightly.
Local authorities have pursued a number of strategies in order to maintain neighbourhood services in the face of deep spending cuts. Staff numbers have been cut, but without a commensurate fall in service provision, meaning staff are being asked to do more. Local planners are deciding more applications and professionally qualified food standards and hygiene staff are undertaking more inspections and audits per person each year.
Services from trading standards to road maintenance have prioritised urgent work to ensure spending goes where it is needed most. But there is a danger that this is storing up problems for the future. Regulatory services – food hygiene and standards, health and safety, and trading standards – have all focussed on responding to the most serious concerns, rather than carrying out pre-emptive inspections of low-risk establishments; local authorities have also prioritised major road maintenance over routine, preventive work.
In libraries, councils have cut costs by replacing paid staff with volunteers and allowing more and more libraries to be taken over by community organisations. Despite these cost savings, library services have undoubtedly been scaled back in the face of a budget cut of two fifths in real terms – there are fewer libraries, open for fewer hours, with less stock available to borrow. Local authorities have also scaled back the waste collection services that they provide free of charge.
Both central government and local authorities have actively tried to increase efficiency. The Ministry of Housing, Communities and Local Government (MHCLG) has developed tools and funded programmes to help local authorities become more efficient – such as the Local Digital Innovation Fund, where councils can apply for grants to use technology to reduce costs and deliver better services. Some local authorities have attempted back-office improvements, service redesign and sharing services,**** in attempts to make savings.
There is some direct evidence of increased efficiency in specific neighbourhood services, but it is limited. The Asphalt Industry Alliance, for example, reports that local authorities reduced the average cost of filling a pothole from £73.90 to £52.60 between 2010 and 2019, which equates to a 39.0% real-terms reduction after accounting for economy-wide inflation.
Unlike workers employed by central government, council workers were not covered by the public sector pay cap – but in practice the national pay structure for council workers – a 46-grade payscale – has followed a similar path. The payscale was initially frozen in cash terms between April 2009 and April 2013, after which most local authority staff received below-inflation pay increases.*****
Local government unions negotiated a 1% pay rise for local authority staff in April 2013; a 2.2% rise in January 2015; and subsequent 1% rises in April 2016 and April 2017. As the government does not collect national-level data on staff in outsourced services, where local government payscales do not apply, we cannot say whether local authorities have made savings by squeezing supplier margins where private companies deliver services.
There is some evidence that local authorities are now struggling to recruit sufficient numbers of neighbourhood services staff. However, without any information on whether these recruitment problems have worsened in recent years,****** we cannot judge whether these services are any more at risk of falling over now than they have been in recent years.
MHCLG has no non-financial warning indicators by which to monitor the impact of cuts to spending on local services. The government should develop a set of these to monitor whether local authorities are delivering the level of services they expect, as well as balancing the books. At a minimum, it should publicly explain how it calculates whether local authorities are financially sustainable, as the Public Accounts Committee called for earlier this year.
Overall, local authorities have cut spending on most neighbourhood services while mostly maintaining their scope and quality. But lack of data – from detailed information on road condition to data on compliance with health and safety rules or trading standards – impedes our assessment.
As successive governments since 2010 increased council freedoms, they simultaneously cut measures to monitor and manage performance. While this gave councils greater freedom to prioritise their activities to meet their own area’s needs, the lack of comparable data on service performance makes it harder to assess the impact of spending cuts.
The government now has few warning signs with which to monitor performance. And while it does not need to fully replicate the old performance management regime, it should develop, in consultation with local authorities, a small set of nationally comparable indicators to better understand the impact of changes in spending.
* Local authorities have agreed more performance agreements, extensions of time, or environmental impact assessments with developers that extend the length of time they have to process planning applications. The share of planning applications where the time limit was extended rose from 0.0% in 2009/10 to 24.5% in 2017/18. See Ministry for Housing, Communities and Local Government, ‘Live tables on planning application statistics’, GOV.UK, 2019, www.gov.uk/government/statistical-data-sets/live-tables-on-planning-application-statistics
** The percentage of successful appeals declined from 2.0% (April – June 2016) to 0.0% (January – March 2018). See Ministry for Housing, Communities and Local Government, ‘Live tables on planning application statistics’, GOV.UK, 2019, www.gov.uk/government/statistical-data-sets/live-tables-on-planning-application-statistics, Table 152b
*** This may also reflect a shift in the composition of jobs, and employees leaving industries where they are more likely to sustain injuries, such as agriculture and manufacturing.
**** Local authorities shared services to save money, but there is no clear evidence that it had that effect. See Elston T and Dixon R, ‘The effect of shared service centers on administrative intensity in English local government: a longitudinal evaluation’, Journal of Public Administration Research and Theory, 2019; Dixon R and Elston T, ‘Should councils collaborate? Evaluating shared administration and tax services in English local government’, Public Money and Management, 2019.
***** Some employees at the lower end of the pay band received higher pay increases. See Whitehead M, ‘A better pay deal for local government?’, LocalGov.UK, 24 January 2018.
****** The Local Government Association has conducted annual workforce surveys since 2011/12, but the size and composition of their local authority survey respondents vary each year so change between years may reflect changes in sample. Nonetheless, the surveys do not show much change in recruitment or retention pressures. The median turnover rate for local authorities remained steady between 2011/12 (13.1%) and 2017/18 (13.4%), although the median vacancy rate for local authorities increased slightly over the same period, from 4.5% to 8.0%. The percentage of local authorities saying that they are “currently experiencing recruitment or retention difficulties” also rose slightly from 74.0% to 78.0% between 2013/14 and 2017/18. See Local Government Association, ‘Local Government Workforce Surveys’, 2011/12 to 2017/18, no date, www.local.gov.uk/publications?keys=workforce+survey
It is similarly difficult to judge whether local authorities have fully managed to meet growing demands for these neighbourhood services.
There is some limited evidence of local authorities rationing their services – such as collecting waste less frequently and limiting libraries’ functions. However, residents’ satisfaction with these services nonetheless seems to have fallen only slightly.
In other areas, local authorities are still managing to meet demand, and have even reduced backlogs, notably in food safety and road maintenance. The share of food establishments in England waiting to be inspected and rated for food hygiene shrank from 7.3% in 2009/10 to 5.0% in 2018/19. The estimated time needed to eliminate the backlog of road maintenance – judged by how many years local authorities think it will take them to bring all roads up to a “reasonable steady state” – has also fallen, from 16 in 2011/12 to 10 in 2018/19.
As the population grows, so too will demand for neighbourhood services. To meet demand, spending on neighbourhood services will have to rise. If demand rises in line with population growth, and if local authorities remain as efficient as they were in 2018/19, then spending on neighbourhood services would need to be 2.9% higher in real terms in 2023/24 than in 2018/19 in order to maintain performance.
Local authority spending power is set to rise by 5.8% in real terms between 2018/19 and 2020/21. This reflects increased grants for social care, public health and schools’ high-needs funding (announced at the 2019 spending round) and council tax and business rate increases forecast by the Office for Budget Responsibility (OBR).
Assuming that council tax and business rate revenues continue to rise in line with OBR projections thereafter, local authority spending power would be 7.3% higher in 2023/24 than it was in 2018/19. This would mark a significant turnaround compared to the last spending review, when spending power increased only £1.7bn, from £44.7bn (2015/16) to £46.4bn (2019/20), a real-terms fall of 4.2% after accounting for economy-wide inflation.
If local authorities increase spending on neighbourhood services at such a rate, it should be enough to meet the extra demand they are predicted to face. However, local authorities are likely to use most of this money to increase spending on social care – where demands are expected to rise more rapidly – while continuing to squeeze neighbourhood services, as happened after 2010 (see Chapter 4).
Projected spending and demand for neighbourhood services
|Projected increase in demand by 2023/24||2.9%|
|Spending scenario||Local authority spending power||Recent trajectory||Meet demand|
|Change in real-terms spending by 2023/24||7.3%||-10.9%||2.9%|
|Spending in 2023/24 (2018/19 prices)||£5.7bn||£4.7bn||£5.4bn|
|Impact on unprotected government spending (2018/19 prices)||–||-£1.0bn||£0.2bn|
|Projected gap (2018/19 prices)||-£0.2bn||£0.7bn||–|
Source: Institute for Government calculations. See Chapter 13, Methodology.
Any increase in spending on neighbourhood services would be a sharp turnaround from the cuts experienced since the 2015 spending review. If, instead, that pace of cuts were to continue, spending on neighbourhood services would fall by 10.9% in real terms between 2018/19 and 2023/24. That would leave spending £700 million below what we estimate would be needed to meet demand.
In that case, local authorities would have to make additional, ongoing efficiency improvements to maintain the scope and quality of neighbourhood services. Beyond providing advice and funding some small programmes to encourage local authorities to make efficiencies, the government has mainly left local authorities to find efficiencies themselves. But, as described above, pushing this strategy further will be risky.
The government lacks information on how neighbourhood services are performing and whether the current level of efficiency is sustainable, let alone whether further savings can be achieved.