The Department for Transport (DfT) and the Department for Communities and Local Government (DCLG) have been asked to prepare for further budget cuts of up to 40% by 2020, in a move that could add to the mounting pressure on highways and transport revenues budgets.
As part of the preparation for the 2015 spending review, to be published in November this year, chancellor George Osborne has written to all unprotected heads of departments instructing them to map out two scenarios for cuts of 25% or 40% to their resource budgets by 2019/20.
The Treasury said this announcement is a repeat of reductions requested under the 2010 spending review, which has already delivered around £98bn of savings, and contributed to cuts of 35% to highways and transport budgets over the last parliament.
Transport Network has reported on concerns in the Department for Transport and across Whitehall that further cuts to councils’ revenue cash from the DCLG could cause problems when it comes to delivering the major capital transport schemes.
The Local Government Association (LGA) said a 25% real terms reduction to the local government finance settlement would equate to a decrease of £4bn by 2020 while a 40% reduction would mean this rises to £7bn.
LGA chairman, Cllr Gary Porter, said: ‘Councils have already made £20bn in savings since 2010 following reductions in government funding of 40% and have worked hard to shield residents from the impact.
‘For many councils, there are few efficiencies left to be made and these alone will not be enough to cope with further funding reductions.
‘Vital services, such as caring for the elderly, protecting children, collecting bins and filling potholes, will struggle to continue at current levels.
‘If our public services are to survive the next few years, we urgently need a radical shift in how public money is raised and spent, combined with proper devolution of decision-making over transport, housing, skills and social care to local areas.’
Chancellor George Osborne said: ‘We’ll invest in our priorities like the NHS and national security.
‘Elsewhere in government, departments will have to find significant savings through efficiencies and by devolving power so people have a greater say over the issues that affect them and their communities. We’ll deliver more with less.’
A Treasury spokesman added: ‘The government is clear - it can achieve this while maintaining the public services people rely on because it’s done it before.’