One in 5 councils teetering on brink of chapter in blow to key providers
Nearly one in 5 council chiefs concern they should declare chapter subsequent yr if they do not have sufficient money to maintain key providers operating.
Cash-strapped city halls mentioned the shortage of additional funding from Chancellor Jeremy Hunt in final month’s Autumn Statement may tip councils into disaster, leaving them unable to steadiness the books. A survey by the Local Government Association (LGA) discovered 17% of city corridor leaders thought it was very or pretty doubtless they must subject a Section 114 discover, which might freeze all non-essential spending, in 2024/25. Some 7% concern they are going to be compelled to behave earlier than the tip of the tax yr in April.
More than 1 / 4 (29%) expressed concern their native authority would not have sufficient funding to fulfil its statutory duties in 2023/24, rising to half (50%) for the next yr. They embrace very important providers like waste assortment, road cleansing and serving to homeless individuals.
The LGA estimates that councils in England face a £4billion funding hole over the following two years simply to maintain providers standing nonetheless. Town halls should weigh up mountain climbing council tax or inflicting additional cuts if the Government does not act, they mentioned.
Councils will be capable to hike basic council tax by 3% and portion earmarked for social care by one other 2% with out holding a referendum in 2024/25. The majority of households (76%) had been hit by the utmost 5% rise in council tax this yr.
LGA Chair Cllr Shaun Davies mentioned: “The lack of funding for local services in the Autumn Statement has left councils facing a growing financial crisis. No council is immune to the risk of running into financial difficulty. As our worrying survey shows, many now face the prospect of being unable to meet their legal duty to set a balanced budget and having Section 114 reports issued.
“Local government is the fabric of our country, with councils providing hundreds of services that our communities rely on every single day. For many people, these services are a lifeline. If councils cannot thrive then our communities cannot thrive.” He warned the “easy savings have long since gone” and called for urgent help from the Government.
Meanwhile, a survey by the Conservative-led County Councils Network (CCN), which represents 23 counties and 13 unitary authorities, showed nine in 10 of its member councils said the Autumn Statement left them in a “significantly worse” position. It found 80% of councils are now planning further “painful” reductions in services and 90% suggested they will introduce maximum council tax rises next year.
Nine councils have issued at least one section 114 notice since 2018, with Nottingham City Council the latest authority to declare itself effectively bankrupt.
A Department for Levelling Up, Housing and Communities spokesman said: “We have made an extra £5.1 billion of funding available to local authorities in the last financial year worth an additional 9.4% in cash terms to budgets. Councils are ultimately responsible for the management of their own finances, but we stand ready to talk to any council that is concerned about its financial position.”
