English councils ‘face £52bn funding black hole’

22 May 19

English councils could be forced to make draconian cuts to local services if Westminster does not pump extra cash into local government to avoid a £51.8bn black hole over the next six years.

This is according to the County Councils Network, which released figures today saying that even if local government in England raised council tax by 2.99% per year between 2019 and 2025, the funding gap would still be more than £30bn.

Paul Carter, CCN’s chair, said: “Over the last decade councils have played a crucial part in reducing the deficit, but the yearly compounding effect of funding cuts and rising demand means that the situation is fast becoming untenable.

“This research demonstrates the need for government to provide all councils with additional resources at the Spending Review, with the most significant financial challenges being experienced by county and metropolitan authorities most in need.”

The £51.8bn funding gap would only maintain services as they are currently run, the CCN added – plugging it would not improve or enhance them. The £30bn figure assumes that central government would allow councils to raise council tax bills by 2.99%, the organisation also said.

Councils in England were likely to end up offering residents a ‘bare minimum core offer’ to residents unless government provides extra funding, the CCN warned. “Yearly council tax, using their reserves, and making services more efficient and productive, will not be anywhere near enough to fill the funding gap".

If the Spending Review does not happen this year – as seems possible because of Brexit uncertainty – Westminster should provide English local government with emergency funding for the next year, council leaders have told the CCN.

County councils, which have responsibility for adult social care and cover 46% of England’s population, were expected to be worse hit – as they have limited ability to raid reserves or introduce fees to charge for services, the umbrella group pointed out.

 “If government does not provide additional funding for councils over the medium term, many local authorities will resort to providing the bare minimum, with many vital services all but disappearing, particularly preventative services,” Carter added.

“Even these draconian cuts won’t be enough for many well run councils to balance the books, and it will leave our finances in disarray with many of us struggling to deliver even the basic level of local services.”

CCN commissioned the consultancy giant PwC to carry out the research, which it did with its own spending needs model and looking at government figures. It also used some figures from consultancy Pixel Financial Management for future funding assumptions. 

Peter John, chair of London Councils, said: “This report adds to the growing body of evidence that councils across the country are in an increasingly precarious financial position, which is taking an unacceptable toll on our communities.

“Core funding for London boroughs has fallen by 63% since 2010 and we need to make £2 billion more savings between 2018 and 2022 to balance our books.”

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