Even ‘draconian cuts won’t be enough’ as councils face £50bn funding blackhole

Councils in England face a funding black hole of over £50bn across the next six years, according to a new report warning that local authorities will soon be forced to resort to providing the “bare minimum.”

In the new report, the County Councils Network (CCN) has called for the Treasury to urgently allocate funds towards local government, stating that rising demands and escalating costs are driving councils towards an “untenable” situation.

The independent analysis of the future financial sustainability of English councils concluded that they face a £51.8bn funding shortfall over the next six years unless Westminster does not provide more money.

The CCN said that even if local authorities all raise council tax by 2.99% each year, the cumulative funding gap will still be more than £30bn, forcing councils to “set out another round of draconian cuts to local services, providing a basic, bare minimum core offer to residents.”

The network says that county leaders of some of England’s largest councils are urging the government to provide authorities with a significant funding boost in the upcoming Spending Review.

They also said that with a £4.8bn funding gap for this year alone, they want the government to provide clarity and emergency funding for next year if the review is delayed because of Brexit.

PwC analysis found that county authorities face the largest funding pressures and are “the most exposed to financial risk” due to limited ability to raid reserves or raise fees.

CCN chairman Paul Carter stated: “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 that 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.

“Today’s report concludes that counties are most exposed and least able to address these financial pressures – local government is at the limit of its elasticity. Therefore, this Spending Review is crucial if we are to protect and enhance services.”

The government is currently undertaking a review of council funding titled the ‘fair funding review,’

A ‘fair funding review’ is currently underway, and the government says councils have access to £46.4bn of funding this year which it says is a real-term increase.