Spiralling inflation means councils face 'difficult decisions' on services warns CCN

Figures based on research conducted by the County Councils Network (CCN) and the Society of County Treasurers show that the estimated costs of inflation in 2022/23 for 40 of England’s largest councils has risen by 92 per cent in just three months since they set their budgets in March.

With the UK’s inflation rate rising from 5.5 per cent at the start of the year to 9 per cent this Spring the research estimates that councils’ costs from inflation have risen from £789m in March when they set their budgets to £1.5bn as of June, leaving them with £729m of additional unfunded costs. County authorities are particularly exposed to these rising costs because of the nature of delivering services in large rural areas.

Councils are warning they face a winter of ‘difficult decisions’., which could include further unplanned reductions to services and the cancellation or delays to major construction projects such as new roads, amenities and infrastructure upgrades to schools, as well as pothole filling.

The research reveals a breakdown of the total £1.5bn of inflationary costs being experienced by those authorities during this financial year:

• Adult social care services are expected to be hit with £428m of additional in-year costs, including higher fees to care providers to offset their rising costs of running care homes. Children’s social care faces £72m of additional costs

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• The cost of delivering capital projects is set to be £397m higher, including an additional £211m in building new roads and pothole filling, while the cost of building new schools and other construction and building maintenance has grown £149m.

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• Record energy prices are expected to add a minimum of £107m to council costs, including £60m for streetlights and £46m on fuel and energy bills.

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• Inflation in external contract and labour costs, including highways maintenance and waste management, are expected to add £136m to council budgets at least.

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• Rising fuel prices mean that bus, taxi and minibus providers are charging councils more for school transport services, adding £77m at least to councils’ costs.

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• Increases in staff pay are expected to add £259m to the revenue budgets of councils.

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Cllr Carl Les, Finance Spokesperson for the County Councils Network, said:
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“Councillors in their communities know how much the cost of living crisis is impacting the lives of millions of people across this country and the Chancellor has rightly prioritised financial support those struggling the most.

“Councils’ frontline services play a vital role in supporting the most vulnerable through these difficult times, while their capital investment in local roads and infrastructure support local growth and employment at a time when the country is facing further economic strain in the coming months.

“Global price increases and spiralling inflation are having a major impact on these day-to-day services and construction projects, with our analysis showing that county authorities are facing extraordinary additional costs at a time when budgets were already under strain.

“Councils have a legal obligation to balance their budgets and have very little scope for meeting these pressures without cutting services, cancelling or delaying major infrastructure projects, or proposing even higher council tax rises next year. With inflation likely to rise even further remain high for the foreseeable future, councils face a winter of difficult decisions unless the government provides extra funding to offset these substantial extra costs.”