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One in Three Councils Fear Funding for Legal Duties Will Run Out Within Three Years

currency-2317703_640As more than 1,400 local government leaders, councillors and ministers gather at its Annual Conference in Bournemouth today (July 2), the Local Government Association is revealing the initial findings of its survey of council finances ahead of the Spending Review.

It reveals that:

  • 1 in 3 councils fear they will run out of funding to provide their legal duties by 2022/23.
  • That number rises to almost two thirds of councils by 2024/2025 or later. The LGA estimates that councils face an overall funding gap of £8 billion by 2025.
  • Almost a fifth of councils (17 per cent) are not confident of realising all of the savings they have identified to make this year (2019/20). An unprecedented rise in demand means many councils are having to spend more than they planned for in adult social care, children’s services and homelessness support. These overspends have seen councils forced to make in-year budget cuts to try and balance their books.

Between 2010 and 2020, councils will have lost 60p out of every £1 they had from central government to run local services. The next Spending Review will be make or break for vital local services and securing the financial sustainability of councils must be the top priority.

National political uncertainty and an unresolved Brexit means the chances of the Government carrying out a three-year Spending Review this year look increasingly unlikely. Instead, councils may face a one-year roll-over settlement.

Either way, councils urgently need some certainty about how local services will be funded next year so they can try and plan financially for next year.

The LGA, which represents councils in England and Wales, is therefore calling for the next Prime Minister to prioritise local public services in the Spending Review and give councils urgent certainty about future funding, business rates retention and the fair funding review.

At the very least, the Government needs to confirm the continuation of key funding streams next year, such as the Better Care Fund, and provide councils with local freedom to make decisions about council tax levels.

Councils also need a guarantee they will have enough money to meet the growing demand pressures they face next year, particularly in adult social care, children’s services, special educational needs, homelessness support and public health activity. The LGA estimates that councils in England face an overall funding gap of £3.1 billion in 2020/21.

This is the only way to ensure councils can meet their legal duties to provide dignified care for our elderly and disabled, protect children, and prevent and reduce homelessness and protect the wide-range of other valued local services which also make such a positive difference to communities and people’s lives.

Lord Porter, LGA Chairman, said:

“Councils in England face a funding gap of more than £3 billion next year, rising to £8 billion by 2025.

“As this survey shows, if the Government fails to adequately fund local government there is a real risk to the future financial viability of some services and councils.

“Councils would normally have started their budget-setting planning process but remain completely in the dark about how much funding they will have next year. Communities relying on the vital local services that make a difference to their lives deserve better.

“Securing the financial sustainability of local government must be the top priority for the next Prime Minister. Urgent guarantees are needed that councils will have the funding they need to ensure our vital public services survive the uncertainty ahead.

“With the right funding and powers, councils can continue to lead their local areas, improve residents’ lives, reduce demand for services and save money for the taxpayer.”