The Local Government Association (LGA) has called for the government to provide “certainty of adequate funding” for councils as a report finds that £60bn of spending cuts could be needed to fund the mini-budget.
The Institute for Fiscal Studies (IFS) published its Green Budget, funded by the Nuffield Foundation and in association with investment bank Citi on 11 October. It found that chancellor Kwasi Kwarteng will need to raise £62bn in 2026-27 by either cutting public spending or raising taxes. This was based on Kwarteng’s mini-budget last month, which promised “to get debt falling in the medium term”.
However, James Jamieson, the LGA’s chairman, said that local authorities “have done more than their fair share of the heavy lifting” when it comes to funding cuts, as they have already faced real-terms reductions in central government support of £15bn between 2010 and 2020.
He said: “The government needs to ensure councils have the funding to meet ongoing pressures and protect the services that will be vital to achieve its ambitions for growth and to produce a more balanced economy, level up communities and help residents through this cost-of-living crisis.
“Without certainty of adequate funding for next year and beyond, and given the funding gaps they are seeing, councils will have no choice but to implement significant cuts to services including to those for the most vulnerable in our societies.”
The IFS said that the £62bn of public spending cuts could be achieved through a combination of slashing working-age benefits and capital investment, plus making some unspecified cuts to public services.
However, Paul Johnson, the IFS’s director, warned that even though these cuts might work on paper, “the chancellor should not rely on over-optimistic growth forecasts or promises of unspecified spending cuts”.
He added: “To do so would risk his plans lacking the credibility which recent events have shown to be so important.”
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