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Councils in England could face a funding “black hole” of over £50bn over the next six years, with local authorities warning they will have to resort to providing the “bare minimum” if no extra funding is made available.
An independent analysis of councils’ financial sustainability up to 2025 from PricewaterhouseCoopers LLP (PwC) for the County Councils Network (CCN) has found that rising demand for services and rising costs, driven in part by inflation, could contribute to councils needing an additional £51.8bn of funding over the period 2019-2025.
Factors including yearly council tax rises, using reserves. and making services more efficient and productive will not be enough to fill the funding gap, meaning councils will be left with no choice but to provide a “core minimum” offer to residents.
The report reveals that even filling the gap only keeps services “standing still” – rather than improving or enhancing them – nor will it reverse the last nine years of cuts.
If councils raise council tax by 2.99% each year, the cumulative funding gap will still be over £30bn.
County leaders, who run some of England’s largest councils, argue today’s report demonstrates the need for government to provide councils with a “significant funding boost” in this year’s anticipated Spending Review.
The funding gap for this current year alone stands at £4.8bn.
The report also outlines that those counties bear the brunt of funding pressures into next decade, fuelled by rising costs for delivering services and rising demand for them.
The funding gap facing those 36 areas over the six-year period amounts to £21.5bn, 41% of the total, with Metropolitan boroughs making up £13.3bn, 25% of the total, and London boroughs just 7%, or £3.4bn.
Cllr Paul Carter, chairman of the County Councils Network, highlights that over the last decade councils have played a “crucial part” in reducing the deficit, but the yearly compounding effect of funding cuts and rising demand means the situation is fast becoming “untenable”.
“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,” he said.
“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.
He continued: “With the Ministry of Housing, Communities, and Local Government expected to put together an ambitious but realistic submission for additional departmental funding in the Spending Review for local authorities to match population growth and rising demands and demographic pressures, particularly social services, it is imperative that the Treasury delivers.”
Commenting on the report, Simon Edwards, director of the County Councils Network, said: “The publication of this research by CCN comes at an important time.
“It provides a platform for the sector to unite around ahead of the Spending Review and make a united case for additional funding, while also recognising that the diverse circumstances faced by different types of councils to influence the fair funding review.”
He added: “We now want to take our case to the Treasury and convince them of the need to invest in all of local government, while ensuring that the government implement the fairer funding review so that residents can be provided with a more consistent level of service based on genuine need.”
