Rethinking UK Public Service Budgets: A Time for Change?

Local authorities in the UK face significant challenges with budget cuts and increasing demand, prompting calls for a fundamental change in public spending to ensure the long-term sustainability and success of our essential public services.

Investment in Prevention

Long-term investment projects are often cut in favour of short-term gains, with the decision to abandon the northern leg of the high-speed rail project (HS2) the latest example of this. However, a new report published by Demos, Revenue, Capital, Prevention: A New Public Spending Framework for the Future, highlights the importance of investing in preventative, longer-term initiatives to address societal and economic challenges. 

The report also emphasises the high costs of late interventions and the need for innovative funding solutions as local authorities face increasing budget demands. 

Local Government Spending

In 2023-24, UK local government spending has seen significant increases in key areas. In England, local authorities are projected to spend £117.6 billion, a substantial rise from the previous year. Adult social care budget is up by 10% to £22.3 billion, children’s social care increases by 11% to £12.7 billion, and education services see a 3.7% increase to £38.7 billion. Highways and Transport Services also rise by 15%.

Welsh Government reports a total revenue expenditure of £10.4 billion for 2023-24, with county councils up 7.9%, police up 4.6%, fire authorities up 11.9%, and national park authorities up 0.5%. Gwynedd stands out with a 13.2% increase due to its role as the lead authority for a significant UK Shared Prosperity Fund grant.

Focusing on the net revenue expenditure of public services only, local authorities in Scotland provisionally reported £13,741 million in 2022-23 and budgeted £13,891 million for 2023-24, with education and social work accounting for 79% of expenditures.

While these expenditures are essential to meet the needs of communities, the report warns that a failure to invest in prevention and a focus on “short-termism” could lead to even higher costs in the long run. The UK economy is estimated to lose at least £22 billion a year due to late intervention in tackling problems.

PDELs

The report considers the need to incentivise public sector investment in prevention, focusing on the introduction of preventative departmental expenditure limits (PDELs) as a ring-fenced public spending category. However, it concludes that more work needs to be carried out to identify the opportunities and challenges in creating PDELs.

As local authorities navigate the complexities of budgeting in a rapidly changing funding landscape, GrantFinder offers an innovative solution that simplifies access to thousands of funding opportunities to help support essential community services.

John McLaren, Head of Business, GrantFinder and The Knowledge Exchange said:

“The challenges local authorities face regarding funding are significant and complex. As public services bear the weight of increasing demands, finding sustainable solutions becomes paramount. GrantFinder is committed to supporting local authorities in navigating these challenges and facilitating any future changes in public spending.”