The chair of the Public Accounts Committee (PAC) has warned that local authority budgets “will be squeezed” due to central government turmoil and the energy crisis.
Dame Meg Hillier, speaking at Room151’s Local Authority Treasurers’ Investment Forum and FDs’ Summit, said she was worried that finances will suffer under the new prime minister as councils are “let loose”.
She told delegates: “I think there is scepticism in the current administration about the value of local government because you spend money, and you spend money on very difficult issues that probably don’t hit the headlines.”
Hillier pointed out that the new government’s focus will be on the upcoming general election, rather than “sensible and thoughtful policymaking” and highlighted the sacking of Tom Scholar as permanent secretary of the Treasury.
“I worry that the turmoil in central government, sacking people and trying to make sure that wins for the national agenda mean that local government will be squeezed.
“I fear more cuts are to come,” Hillier added.
Energy Crisis
The PAC chair also noted that councils no longer have the funds to cover unforeseen expenses as a result of the current economic backdrop.
She said: “With the cost-of-living soaring and energy prices rising, they [local authorities] don’t have that money to cover any unexpected expenses, [as] energy bills alone will mop that up.”
I think there is scepticism in the current administration about the value of local government because you spend money, and you spend money on very difficult issues that probably don’t hit the headlines.
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Longer-term funding
In her address, Hillier also said that the government had agreed to the PAC’s recommendations to provide longer-term funding for local authorities. But had yet to put this into action.
“This is a real concern to me that they [the government] don’t give you long-term certainty, because if you know longer term what your financial situation is going to be and what your settlements are going to be, then, obviously, you can make much better, more rational decisions,” Hillier continued.
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