UK councils left with £3bn financial black hole

A BBC investigation has shown that UK councils face a £3 billion black hole in their budgets as they emerge from the coronavirus pandemic.

The government says it has handed councils £12 billion during the pandemic, but as many as ten councils have has to ask to borrow £300 million of emergency money from the government to plug financial holes.

As a result of the funding shortfall, some local authorities were struggling to carry out statutory duties and were at risk of bankruptcy.

Analysing 170 upper-tier and single tier councils in the UK the BBC Shared Data Unit found that UK local authorities plan to make at least £1.7 billion worth of savings in the 2021-22 financial year while also using more than £500 million worth of reserves to balance the books. Furthermore, a quarter of those savings - some £434 million - will be made in adult social care departments, which provide support to the elderly and vulnerable.

Despite making the cuts, the BBC reports that local authorities predict a £3 billion shortfall in their budgets by 2023-24. Nearly 60 per cent of councils in England have risen council tax by the new statutory maximum of 4.99 per cent to compensate for losses, a rise of about £100 on a yearly Band D bill in many areas.

Sharon Taylor, a Labour councillor who chairs the Local Government Association's resources board, said the pandemic had highlighted an existing funding crisis brought about by a reduction in central government grants - a fall of up to 70 per cent over ten years in some places.