Councils criticised over recession

The Audit Commission said that local authorities in England are now facing the "second wave" of the downturn, as the effects of rising business failures, bankruptcies and unemployment leads to deepening social problems.

While most councils have taken some steps to support local businesses and help vulnerable families, the impact is likely to be "modest" and few are targeting their efforts effectively.

The commission has accused councils in some areas - particularly those which had so far escaped the worst effects of the recession - of being "complacent".

"Many councils should be doing more to prepare for the expected social, financial and economic development challenges ahead," it said. "This includes councils that have escaped the worst effects to date, some of which are complacent."

The commission warned that most areas are likely to experience worsening social problems including domestic violence, alcoholism, drug addiction, and young people unable to find work.

Already councils are seeing a rise in demand for benefits, welfare, and debt counselling while the pressure on social care and mental health services is increasing. There is also growing demand for state school places from families who can no longer afford to educate their children privately, while fly-tipping, abandoned cars, and stray dogs are all on the increase.

At the same time councils are seeing their incomes squeezed, with district councils in particular suffering from a fall off in planning fees and other revenues in the wake of the property market collapse. Already many councils are resorting to recruitment freezes and redundancies - voluntary and compulsory - in an attempt to get their costs down.

The commission said that so far councils in the West Midlands, Yorkshire and the Humber had been hardest hit by the recession while those in the South West and Eastern England had been least affected.

The Department for Communities and Local Government acknowledged that the response by councils had been "patchy" but said extra Government support would be provided for those that are struggling.