One in five councils sees sign of upturn - LGA

3 July 2009

A fifth of councils believe there is some evidence of an upturn in their local economy but across the board town halls continue to report people and businesses struggling to cope during the recession, a new survey reveals today.

The survey of leaders and chief executives of all councils in England, conducted by the Local Government Association and unveiled today details the impact the recession has had on businesses, residents and local authorities themselves.

The LGA has warned that the effects of the downturn will continue to be felt after recovery has started because unemployment can carry on rising even after growth returns.

Over the last six months, 90 per cent of local authorities have seen an increase in the number of people seeking welfare or debt advice and 86 per cent have seen an increase in applications for housing benefit. 83 per cent have seen more demand for business support services.

The LGA says councils will continue to help people to cope with growing unemployment, debt, housing difficulties and business failures.

The main findings of the report are as follows:

22 per cent thought there were some early signs that an upturn in their local area is imminent (60 per cent did not). Of the 22 per cent, 62 per cent believed their local economy would start to recover within nine months. 40 per cent expected an upturn within six months
90 per cent of authorities had taken action to protect local businesses over the past six months. 70 per cent had taken action to help support local voluntary associations
86 per cent of respondents had experienced an increase in the number of housing benefit applications over the last six months, 90 per cent had seen more people seeking welfare/debt advice and 83 per cent had experienced more demand for business support services
42 per cent of councils had cut jobs over the past six months, and 34 per cent had introduced a recruitment freeze
The two most pressing challenges presented by the recession for authorities are reduced income (57 per cent) and balancing the budget (59 per cent)

Cllr Margaret Eaton, Chairman of the LGA, said:

"Many parts of the country are still feeling the sharp effects of recession. Different parts of the country are faring very differently to others which underlines how a national, one-size-fits-all solution to getting us out of the downturn simply isn’t going to work.

"When people lose their job, can’t pay the mortgage or find their business is struggling, it is the council that is there to help. From paying bills more quickly to local businesses, clamping down on unscrupulous loan sharks and stimulating local development, town halls are pulling out the stops to help their areas through the downturn.

"Decisions about the economy need to be made at a local level so that attempts to help actually respond to what local people need. While some councils are seeing early signs that an upturn in their local economy may be on the horizon, all are bracing themselves for a long hard slog even after the economy starts growing again.

"Previous recessions have taught us that unemployment can keep on rising even when growth returns to the economy. Councils are acutely aware that local people and businesses will need continued support, and are taking difficult decisions to balance the books and invest money where it is needed most."

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