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Councils may be forced to make cuts to social care budgets due to Rishi Sunak’s pledge to increase defence spending to 2.5 per cent of GDP, senior councillors have warned.
Representatives of local authorities in many “Red Wall” areas say the extra money for the Armed Forces risks municipal funds that are already under pressure being “pared to the bone”, and that services for elderly and vulnerable children will be hit hardest.
The Prime Minister has ruled out scrapping plans for tax cuts and has insisted ring-fenced Whitehall departments such as health and education will continue to be protected in order to fund the extra £4.5bn a year cost of putting the UK defence industry on a “war footing”.
But experts from the Institute for Fiscal Studies have said that this implied non-protected departments and public services – such as local government, prisons and further education colleges – would have their budgets cut further over the next five years.
In a separate development, official figures have revealed that the Government would have spent an extra £83bn on defence between 2011 and this year if ministers had maintained Labour’s spending of 2.5 per cent.
Analysis by the House of Commons Library, seen by i, shows that the 2.5 per cent level under the last Labour government dropped to 2.36 per cent of GDP in 2011 and dipped as low as 2.03 per cent in 2015.
The lower rate over more than a decade has fuelled complaints by Conservative MPs that the Armed Forces have been “hollowed out” by underspending.
If 2.5 per cent had been maintained for every year of the Conservative coalition and majority governments, an extra £83bn would have been spent on the military.
Mr Sunak has faced questions over how he will fund the new pledge to increase defence spending to 2.5 per cent by 2030, which by that date will cost an estimated extra £4.5bn.
The Government claims that the funding will come from diverting research and development cash and cutting the Civil Service headcount by 72,000.
But on Wednesday the Prime Minister refused to rule out cutting spending in non-protected Whitehall departments to meet the pledge.
Councillor Graham Chapman, vice-chairman of SIGOMA, the group of councils which represents urban areas in northern England, the Midlands and south coast, said the axe was likely to fall on adult and children’s social care, which for some authorities makes up 70 per cent of budgets.
Councils are already facing a funding squeeze from central government after Chancellor Jeremy Hunt announced in his Budget in March that growth in local government spending would be maintained at 1 per cent a year.
Local government experts have warned this will mean a real terms cut of 4 per cent over the next four years once inflation is taken into account.
Councillor Chapman, a Labour councillor in Nottingham, told i that the defence spending increase would mean council finance chiefs have “nowhere else to go” as they tried to balance the books.
Several councils in England have already declared technical bankruptcy – using section 114 notices – due to funding squeezes, but Councillor Chapman warned the defence uplift would mean more town halls following suit.
He described Mr Sunak’s announcement as “half-baked” but added: “If there were any substance to it, then we are already planning for a 4 per cent reduction in local government funding, a real terms reduction of 4 per cent, over the next four years.
“This is just going to add more agony to that. What they need to understand is that the services most vulnerable to cuts are where all the pressure is – adult social care and children in care. That already accounts for 70 per cent of local government spend.
“We cannot stop repairing roads or collecting waste. It will be children and the elderly paying for this.
“It is inevitable that more councils’ budgets will be put under pressure.
“Even if they declare a section 114, councils still have to provide services. Any further budget cuts will mean councils are pared to the bone.”
