Councils running out of funding to provide statutory children's services

According to initial findings from the Local Government Association’s (LGA) survey into council finances, of which 141 local authorities responded, 110 were able to indicate the year from which they were likely, on the basis of current funding, to no longer have enough money to fulfil all of their legal duties.

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A third of councils said they fear they will run out of funding by 2022/23, and almost two-thirds by 2024/25.

The LGA, which estimates that local authorities face an overall funding gap of £8 billion by 2025, has released the findings as more than 1,400 local government leaders, councillors and ministers gather at its annual conference in Bournemouth today.

Its survey also revealed that close to a fifth of councils are not confident of realising all of the savings they have identified to make this year (2019/20). According to the LGA, an ‘unprecedented rise in demand' means many local authorities are having to spend more than they planned for in children’s services, adult social care and homelessness support. This has forced councils to make in-year budget cuts to try and balance their books.

The LGA says the next spending review will be ‘make or break’ for ‘vital local services’ and securing the financial sustainability of councils must be the ‘top priority’. However, due to ‘national political uncertainty and an unresolved Brexit, it claims the chances of a three-year Spending Review this year look unlikely and councils may instead face a ‘one-year roll-over settlement’.

It estimates that councils in England face an overall funding gap of £3.1 billion in 2020/21.

The LGA, which represents councils in England and Wales, is therefore calling for the next Prime Minister to prioritise local public services in the Spending Review and give councils ‘urgent’ certainty about future funding, business rates retention and the fair funding review.

Comments

Lord Porter, chairman of the LGA, said, ‘Councils in England face a funding gap of more than £3 billion next year, rising to £8 billion by 2025.

‘As this survey shows, if the Government fails to adequately fund local government there is a real risk to the future financial viability of some services and councils.

‘Councils would normally have started their budget-setting planning process but remain completely in the dark about how much funding they will have next year. Communities relying on the vital local services that make a difference to their lives deserve better.

‘Securing the financial sustainability of local government must be the top priority for the next Prime Minister.’

Government response

A Ministry of Housing, Communities and Local Government spokesperson said, 'Councils are a vital link to meet the needs of residents, that’s why we’re providing local authorities with access to £46.4 billion this year – a real terms increase – including extra funding to support some of our most vulnerable groups.

'Ultimately councils are responsible for managing their own resources and we are working with local government to develop a funding system for the future.'