Threat to services

Councils warned over funding

COUNCILS across England need to follow Oldham’s example and prepare for lean years ahead.

The warning from the Audit Commission, the Government’s spending watchdog, says councils should take tough decisions like pay freezes to protect frontline services such as schools.

Councils have been cushioned from the worst of the recession because of a Government three-year funding settlement which ends in 2011.

But with two-thirds of council income coming from Government grants, the commission warns today that councils must prepare for an abrupt drop in funds next year.

Oldham Council leader, Councillor Howard Sykes, warned in November that by 2013 the council will have to have saved a total of £45 million and is expecting the worst three-year funding settlement from central government in decades.

He said: “We predicted we would have to find £10 million next year (2010-11), but what is surprising is that there will be cuts for three years at least and potentially for 10 years.”

He added: “As unemployment rises the council is already facing extra demand for social care, housing, school places, debt advice, increased take up of free services such as school meals, and council tax and housing benefits.

“And prospects of getting finance for major capital projects which need substantial borrowing are bleak.”

He warned that the downturn could lead to council services which are a shadow of what they used to be: “To save money you can stop doing things and employ fewer people.

“It comes to a point when if you remove a critical mass from services, there is no service. You have to consider closing some services.”