The County Councils Network has warned the government that a lack of action could leave councils as ‘little more’ than care services by the end of the decade.
With the Budget and Spending Review coming up soon, Chancellor Rachel Reeves has been urged to act on the £54 billion shortfall that councils face to ensure that the funding gap is plugged. This warning comes alongside analysis from the CCN that has found that the majority of the shortfall has come thanks to an increase in the demand for three service areas. These are:
- Adult social care
- Children’s services
- Home-to-school transport
Further analysis has found that the deficit could be reduced to £38 billion over the course of the next five years if 3% annual council tax increases are implemented, however, the CCN has stated that the government cannot rely on this.
As councils have been forced to divert funding into the areas that they have a legal obligation to deliver, cuts have been required across the more discretionary services such as libraries, buses, and road maintenance. Should cuts continue due to a lack of sufficient funding, councils could be left only providing those care services that they have a statutory obligation to provide.
The analysis outlined above has come as the CCN makes its Spending Review Submission, as well as a new report titled The Outlook for Council Finances this Parliament. Some of the key findings are:
- Councils are expected to see a rise in additional costs worth £26bn between 2022 and 2030 due to rising demand, inflation, and continuing market failure.
- These increased costs, should there be no additional funding from government, leave councils facing a cumulative funding gap of £54bn over five years.
- Annual council tax increases of 3% would reduce the shortfall by a third, however government should not rely on increases of more than 3% to close the remaining gap.
- ‘Deep and fundamental’ reform to services within this parliament could support further reductions to the shortfall.
Finance Spokesperson and Vice-Chair of the County Councils Network Cllr Barry Lewis said:
“Councils pride themselves on the quality and breadth of the care services that they provide to vulnerable people. However, councils do much more than this: delivering over 800 different services to local residents and businesses, many of which are essential to people’s everyday lives.
“But today’s new analysis shows the bleak financial outlook facing local authorities of all shapes and sizes. To meet all their projected service pressures, councils are starring down the barrel of a £54bn funding black hole. While council tax rises can reduce this deficit, government cannot rely on this alone and local authorities would still be left to find billions each year.
“With the funding gap fuelled by rising costs in adult social care, children’s services and SEND transport, councils will have to divert even more funding to prop up these services, leaving councils providing little more than care services by the end of this Parliament. But with many local authorities already close to the legal minimum on the services they deliver, our survey shows still won’t be enough for some. Ministers would therefore have no choice but to radically rethink the statutory responsibilities placed upon councils to prevent six in ten declaring bankruptcy by 2028.
“However, this unpalatable trade-off can be avoided by providing a substantive injection of resources to help shore up services this parliament, then embarking on deep and fundamental reform to address demand and market failures driving costs in children’s services, special educational needs, and adult social care. This needs to happen urgently with a plan to be actioned within the next 18 months, otherwise we risk undermining the wide-ranging purpose of local government and derailing the government’s mission-led approach to public-service reform and greater devolution to councils.”
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