SIGOMA survey reveals threat to frontline services and regeneration projects
Posted on October 05, 2022
SIGOMA WARNS THAT COUNCIL FRONTLINE SERVICES AND REGENERATION PROJECTS AT RISK DUE TO INFLATIONARY PRESSURE
Survey data published by the Special Interest Group of Municipal Authorities (SIGOMA) shows the threat to frontline services and regeneration projects this year and the next two years, unless significant additional government support is provided. The unfunded pressures over the period covered by the survey (from this financial year to 2024/25) amount to £2.5bn.
Responding to the survey results Cllr Sir Stephen Houghton, Chair of the Special Interest Group of Municipal Authorities (SIGOMA), said:
“Our survey reveals that that the inflationary pressure on our members is significant and has deteriorated even further since our previous survey earlier this year. Our members are telling us that the threat to the key services that residents rely on is very real, while many regeneration projects, central to “levelling up”, are already being curtailed if not cancelled outright.
The announcement that there will not be a new spending review that recognises the impact of inflation on the cost of services is very concerning. The talk of further cuts to local government is extremely worrying – we know that it is the poorest in our communities that rely most on our services.
Our members predict that inflationary pressure will wipe more than £1bn off our budgets in real terms in each of the next 2 years – this following a decade of austerity and the Covid pandemic, both of which hit the most deprived areas hardest. There are no meaningful “efficiencies” left and our preventative services have been cut to the bone. To stop a winter of extremely difficult decisions the government needs to act now and provide urgent support to the sector”.
Confidence of meeting current budgets (2022-23)
Meeting in-year budgets
- RAG RATING: Only 13% of our members have a 90% confidence (Green) in meeting their budgets for this financial year – while just less than half (47%) have less than 50% confidence (Red)
- On average our members budgeted for an overall increase in pay costs of 2.3% for this financial year, but now forecast it to be 6.2%. This increase compared to what was budgeted for represents an average of £5.4m per SIGOMA council – more than £250m across our network just in this financial year.
- 60% of our members said that they are currently curtailing their portfolio of regeneration projects (47% said they were reducing the scope and 13% said they were planning cancelations or delays).
- Only one respondee said their current portfolio of projects would not be impacted in some way with the rest are reviewing their schemes and waiting for the financial impact to become clearer.
- On average our members budgeted for a 31% increase in energy bills this year. However, our members forecast that bills will increase by 115% for this financial year - with some forecasting increases as high as 300%. The coverage of local government in the energy scheme will remove some of the pressure but councils still await detail on how this will work and what will happen after 6 months. Note that is unclear how much support the scheme will provide to councils so our overall headlines figures do not use energy inflationary pressures for this financial year.
- The additional cost from rising energy bills had represented a quarter of this year’s inflationary pressure.
- Non-energy inflationary pressure represents a £380m pressure for SIGOMA in this financial year - £8.1m per member authority.
A threat to services
- Two thirds (66%) of our members said they either faced a “threat” or “extreme pressure” to key service delivery in the next financial year. 27% said that they faced pressure across services or a reduction on services while just 7% said that the pressures were manageable using reserves and some efficiencies. None of our members said that the situation was manageable if the cash grant was unchanged.
Huge unfunded pressures
- Our members predict an average inflationary pressure of £21.4m in the next financial year (2023/24). This would amount to £1.006bn across our network.
- For 2024-25 our members predicted a slightly higher average pressure of £23.8m - £1.119bn across our network of 47 councils.
- The overall pressure for our members in the period covered by the survey is £2.5bn - £17.7m per council, per year.
The survey was completed by a representative sample (30) of members from all regions SIGOMA represents and follows an earlier survey from May/June 2022.