Search

LGA warns of “existential financial crisis” for local authorities

Funding shortfalls imposed on local authorities mean that many of them are heading towards a future of uncertainty, the Local Government Association (LGA) has said.

With some local councils already on the brink of bankruptcy, the LGA are unconvinced that the situation can be resolved by an increase in the rate of council tax that local residents pay each year. It comes after news filtered through Westminster that the government were considering lifting the current cap on council tax.

The vast majority of local councillors are said to be unmoved by this potential policy shift, believing that there will be very few authorities who raise council tax, even marginally. With many people up and down the country struggling with the current cost of living crisis, councillors don’t believe raising council tax payments is fair.

Scale of the issue

Not only do many local authorities believe raising council tax payments is unfair in the current climate, but they also don’t believe the funds earned from these measures would be enough to properly address the crisis.

On average, a 1% rise in council tax would result in local authorities generating £309m. The LGA have stated that this amount of money simply wouldn’t touch the sides of the current shortfall.

To put that into perspective, the LGA estimate that English councils face a collective £2.4bn shortfall in budget this year due to high inflation, energy costs and contract prices. That isn’t all, though, as they anticipate that this shortfall will rise to £3.4bn in 2023/24 and £4.5bn in 2024/25 if the government do nothing about it.

Two Tory councils, Kent and Hampshire, made a plea to Rishi Sunak last week, informing him that they were “sleepwalking into financial disaster” and that they were at genuine risk of bankruptcy. They called for emergency financial help and demanded a clear plan for “long-term sustainability”.

Speculation is rife that the government’s response to this plea will be to announce that council funding will be rolled over to next April, meaning councils will be left with some incredibly tough decisions to make. Ultimately, they may have to either cut local services or raise council tax. 

Social care concerns

One key local service that is already suffering due to this shortfall is social care. Social care bosses said on Tuesday that they have neither the funding nor the workforce to meet the needs of the elderly and disabled this winter.

This revelation came on the back of the annual autumn survey carried out by the Association of Directors of Adult Social Services. The results of the survey were bleak, finding that nine out of 10 directors will struggle to cope with current resources.

The Association’s Chief Executive, Cathie Williams, said:

“This is the bleakest autumn survey we have ever had. Only a handful of directors have any confidence they may be able to get through the winter with the funding they have and the care workers available locally. We were fearful in the summer and we are fearful now. This affects all of us.”

LGA statement

LGA Chair, James Jamieson, said:

“Local government remains the fabric of our country but many of the vital services we provide face an existential crisis.

Failing to provide long-term funding certainty will force councils to make significant cuts to services next April, including care for older and disabled people, child protection, homelessness prevention, leisure centres and bin collections.

While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils, raising different amounts in different parts of the country – unrelated to need – and adding to the financial pressures facing households.”

Final thought

For the most deprived areas of the country, where local services are needed more than anywhere else, raising council tax payments is almost unthinkable. While the government do have a responsibility to try and drag inflation down and raise funds, there are perhaps better ways to go about it than passing the buck to local councils.

Share

Related Topics

Latest

Net Zero Levelling up – Keeping Pace

Representatives from across the East Coast gathered at the Darlington Mercure Kings Hotel to discuss levelling up as a country and moving forward with Net Zero.

Video Features

How Can we Level Up the UK Sustainably?

Does Democracy Require Proportional Representation?

Marking LGBT+ History Month 2024

How Can Plugging the Skills Gap Support Decarbonisation?

Subscribe to our newsletter for your free digital copy of the journal!

Receive our latest insights, future journals as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.

Never miss an issue by subcribing to our newsletter!

Receive our latest insights and all future journals as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.

Never miss an issue by subcribing to our newsletter!

Receive our latest insights and all future journals as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.

Newsletter Signup

Receive our latest insights as soon as they are published and get invited to our exclusive events and webinars.

Newsletter Signups
?
?

We respect your privacy and will not share your email address with any third party. Your personal data will be collected and handled in accordance with our Privacy Policy.