Research Finds Councils Could Face a £5bn Funding Gap

Today the BBC has published new research which finds that local authorities in England could face a funding black hole of £5.2bn by 2025/26, with the average council now facing a £33m ($42m) predicted deficit by 2025-26 – a rise of 60% from £20m two years ago.

The data is based on a BBC survey, with the broadcaster asking all upper-tier councils how much they were required to save this year, and they projected deficit by 2025/26. Analysis of the figures by the County Councils Network (CCN) finds that its member councils could have to save £734m in 2023/24, based on 32 respondents.

This mirrors a survey from the CCN and the Society of County Treasurers earlier this year, which found that 40 county and unitary councils could have to save over £1bn in 2023/24.

Below, CCN responds to the data from the BBC, released today. 

Cllr Tim Oliver, Chairman of the County Councils Network, said:

“This research by the BBC continues to demonstrate the scale of the financial challenges facing local authorities in England. Our own research published in March this year showed that county and rural councils needed to make over £1bn worth of savings to balance budgets in 2023/24, even after four in five reluctantly levied the maximum council tax rise.

“Despite the government increasing funding for councils over recent years, a combination of high inflation and rising demand has left county and unitary authorities facing some of their most toughest budgetary decisions to date this year. County authorities will do all they can this year to deliver these savings whilst protecting vital frontline services, particularly care services, but there is now little fat to cut after a decade of financial restraint and many councils are facing significant in-year overspends as a result.

“We must remember that while inflation is beginning to reduce, these costs councils have incurred won’t just disappear from our budgets overnight – they are now embedded into the future. Councils in county areas have also been historically underfunded, inevitably leading to higher council tax rates. The medium-term outlook therefore looks bleak unless these higher costs are recognised and councils are given longer term financial certainty, alongside delivering long promised reforms.”

Professor Martin Green OBE, Chief Executive of Care England said: “The BBC’s findings while alarming, do not come as a surprise. The warning lights have been flashing for a long time. There is simply not enough money in local systems. Our Sector Pulse Check, published with the national learning disability charity Hft, found 42% of care providers reported they have had to close down part of their business or hand back contracts to local authorities due to cost pressures. This is despite the demand for care services growing.”

“Without central government properly funding local councils, the demand will continue to far outweigh the ability of the care sector to respond. Without having the right care in the right places, vulnerable people across England will be unable to access the support they need. Care England will continue to call on Government to recognise the vital service adult social care provides, and to implement a long-term funding plan to ensure nobody is left without access to the support they need.”