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Local government finance: chop and change

Presentation

How is local government funding changing? And what might the implications for children's services be? In this presentation for the Office of the Children's Commissioner of England, IFS Associate Director David Phillips looked at the trends in local government spending over time, across the country, and across services, paying particular attention to children's services.

Overall, spending on children's services is shown to have been protected from the large cuts councils face. But this reflects increasing budgets for looked-after children and safeguarding and social work: more generally services for young people and children (like Sure Start) have had their funding cut by two-thirds. Service demand and staffing levels are shown to have increased. But there are more delays in assessing children's needs, and councils increasingly overspend the budgets they set for children's services.

More generally, cuts to council spending are shown to be larger in more deprived areas - a trend which has continued despite changes to the funding system in 2016 designed to allocate cuts more equally across England.

Looking to the future, overall budgets are likely to rise if council tax continues to be increased by more than inflation. But cost pressures are likely to rise faster than revenues from council tax and business rates.

Reforms to the funding system will redistribute funding between areas and could contribute to divergences in funding as local tax revenues grow more quickly in some areas than others.

There are therefore stark choices to make, both in terms of the amount of funding provided to councils, and the role of national and local taxpayers in providing that funding - with many of these choices falling due in 2019.