Councils fear funding for legal duties will run out

A third of councils fear they will run out of funding to provide their statutory services – such as adult social care, protecting children and preventing homelessness – by the end of this Parliament.
 
As more than 1,400 local government leaders, councillors and ministers gather at its Annual Conference in Bournemouth, the Local Government Association is revealing the initial findings of its survey of council finances ahead of the Spending Review. It reveals that: one in three councils fear they will run out of funding to provide their legal duties by 2022/23; and 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.

Furthermore, 17 per cent are not confident of realising all of the savings they have identified to make this year. 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.
 
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, the LGA stresses that councils urgently need some certainty about how local services will be funded next year so they can try and plan financially for next year.
 
Council leaders are 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 LGA says 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.
 
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.”

Nick Rushton, County Councils Network finance spokesman and leader of Leicestershire County Council, said: “Today’s research is another stark example of the challenges facing local government over the coming years, and the impact of the uncertainty surrounding the Spending Review. It follows on from the County Councils Network’s own independent research by PwC, which showed that all councils face severe funding challenges over the next six years – with county authorities closer to than most to the financial cliff edge, with many moving towards providing a statutory ‘core offer’.

“Councils need immediate financial certainty from the incoming Prime Minister. If a full three-year Spending Review is unable to be delivered owing to Brexit uncertainty, County leaders have been calling for an emergency injection of funding for local authorities next year, alongside a commitment to publish the outcome of the fair funding review.

“We welcome the Local Government Association’s calls for extra clarity and we urge the new government to take action to ensure that local services are protected next year, with a commitment to longer term sustainable and fair funding.”