County councils’ face £2.54bn funding black hole by 2021

24 Oct 17

County leaders have warned the government their funding black hole rapidly is set to treble to £2.54bn in four years.

Analysis by the County Councils Network shows that “extreme” rises in demand faced by all 37 county authorities are widening the funding gap.

The CCN is calling on the chancellor to invest additional resources into the services facing the biggest pressures over the next two years, ahead of the conclusion of the fair funding review and expected introduction of business rates retention.

In total, each county on average will face an additional average funding gap of £70m by 2021, on top of planned service reductions, with social care accounting for £26m of this per authority, and £22m in implementing the new national living wage.

Paul Carter, CCN chairman, said: “We are reaching a point where we are have to consider difficult, painful and unpopular decisions next year to deliver balanced budgets, which will reduce and remove frontline services highly valued by our residents.

“The government has said it is in listening mode, and I and my fellow county leaders will be asking ministers across government that we need additional help and support in this Budget or we will all face some very severe consequences in the future. The situation can’t go on.”

The CCN’s analysis, released last week, follows research from the LGA, which showed local government as a whole was facing a £5.3bn funding gap by 2019/20.

Carter said the CCN’s submission to the government would help quell the looming funding problem amid calls for greater devolution, which would make counties strategic authorities with the power “to be the masters” of their own economic trajectories.

In addition the CCN is advocating that should the government break the public sector pay cap for local authority employees with a 2% rise it would cost £297m per year in counties. County leaders say they support the principle but it must be fully-funded by government.

CCN’s Budget submission recommended: 

  • Giving the Department for Communities and Local Government the resource to extend transition grants until 2021
  • The forthcoming Industrial Strategy Whitepaper providing a prominent role for counties
  • Government economic policy to recognise the specific impact of Brexit on areas, such as manufacturing and imports, with counties accounting for the most significant proportion.

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