Councils facing £51.8 billion funding gap over next six years, report warns
Councils could be facing a £51.8 billion funding “black hole” over the next six years, according to a new report.
Such a financial shortfall would mean yearly council tax rises, new charges for services, and more cuts, local authorities say.
Unless extra funding is provided, only “bare minimum” services will be possible, according to the County Councils Network (CCN).
The CCN’s call for extra resources in the forthcoming Government spending review comes as a study it commissioned from PricewaterhouseCoopers (PwC) found that increasing demand for services and rising costs, including inflation, could see councils needing an extra £51.8 billion between 2019 and 2025.
CCN said that without additional funding to fill such a gap, councils will have to set out “further rounds of draconian cuts to local services, providing a basic, bare minimum core offer to residents”.
A spokesman for CCN, which represents 26 county councils and 10 county unitary authorities across England, said: “Importantly, filling this funding gap only keeps services standing still, rather than improving or enhancing them, nor reversing the last nine years of cutbacks.
“If councils raise council tax by 2.99% each year, the cumulative funding gap will still be over £30 billion.”
CCN said that councils would need “immediate clarity and emergency funding for next year” if the spending review is delayed due to uncertainty about Brexit.
CCN said its members faced the biggest funding gap among types of local authorities over the six-year period, amounting to £21.5 billion.
The organisation said county authorities would still be left with a funding gap of £11.6 billion over the six years if they raised their council tax by 2.99%, and their tax base grew at an “optimistic rate” of 1.98% per year.
CCN chairman Paul Carter said: “This research demonstrates the need for government to provide all councils with additional resources at the spending review, with the most significant financial challenges being experienced by county and metropolitan authorities most in need.
“If government does not provide additional funding for councils over the medium term, many local authorities will resort to providing the bare minimum, with many vital services all but disappearing, particularly preventative services.
“Even these draconian cuts won’t be enough for many well-run councils to balance the books and it will leave our finances in disarray, with many of us struggling to deliver even the basic level of local services.”
The report also found that only 11% of the cumulative funding gap nationally from 2020 could be plugged using council “rainy day” reserves.
For shire county councils this figure would be 7%.
The study found that spending on adult social care will rise by £6.1 billion nationally by 2025 compared with a decade before.
A Government spokesman said: “We are investing in Britain’s future, and this year’s local government finance settlement includes extra funding for local services.
“Local authorities will have access to £46.4 billion this year, a real terms increase that will strengthen services, support local communities and help councils meet the needs of their residents.
“The Government will be looking at funding for services as part of the Spending Review.”
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