Barking and Dagenham Council forced into using unsustainable methods to fund services

Cuts to funding from central government are forcing councils into using their reserves to provide se

Cuts to funding from central government are forcing councils into using their reserves to provide services. Picture: Sebastian Murphy-Bates - Credit: Archant

Barking and Dagenham Council is combatting government funding cuts by using methods which may not be “financially sustainable”.

To plug gaps in funding, councils across the country are having to use reserves to fund services. But according to a report from the National Audit Office, this is not financially sustainable, and leaves councils unable to cope with unexpected costs.

This is the eighth year of council funding cuts from central government. Between 2010-11 and 2017-18, Barking and Dagenham Council experienced a 45 pc decrease in funding.

This has led to a nationwide over-reliance on reserves. In 2016-17, Barking and Dagenham Council had £58million in reserves, compared to just £27 in 2010-11. However, as a proportion of its net expenditure – the amount of money it spent in total – 38 pc of the money the council spent used reserves, a 20 pc increase from six years earlier.

According to the NAO report, “a financial model based on dwindling reserves and difficulties in delivering savings is not financially sustainable”.

Cllr Dominic Twomey, cabinet member for finance, growth and investment, said: “We have been forced to take some very difficult decisions as a result of having our budgets slashed continuously by central Government since 2010.

“This includes using our reserves in a proactive but prudent way to make sure we protect vital services for local people.

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“None of these decisions have been taken lightly and I want to reassure residents that they have been taken responsibly.”

He added that the situation should not be compared to that in Northamptonshire, where the county council has declared effective bankruptcy due to its financial troubles.

Using reserves to fund services reduces councils’ ability to deliver ‘invest to save’ programmes, and means any unexpected costs end up having a greater impact.

Councils are also dramatically exceeding their budgets for services – Barking and Dagenham overspent by £14 million in 2016-17, and nationwide, budgets were exceeded by more than £900 million.

In Barking and Dagenham, every service experienced a reduction in spending aside from housing and central services, which include tax collection and benefits.

Planning and development saw the biggest loss with an 83 pc reduction, while adult social care saw only a 15 pc reduction in spending. Other council services include housing, transport, roads, environmental services and libraries and cultural services.