Local councils will be reduced to little more than care service providers, forced to abandon providing other core services, the County Councils Network (CCN) has predicted.
The CCN said on Thursday that based on current projections, local authorities in England would experience a cumulative £54 billion shortfall over the space of this Parliament, unless the government provides extra funding or radically rethinks councils’ statutory responsibilities.
Councils provide a range of services to people, some of which they are legally obliged to deliver, like children’s services and adult social care. The CCN says that despite yearly council tax rises, local authorities have had to prioritise funding these statutory services and reducing spend on other vital services for residents, such as buses, libraries, and road maintenance.
The CCN said this projected £54 billion “funding black hole” is being driven by rising demand and costs in just three areas: children’s services, adult social care, and home-to-school transport for children with special education needs and disabilities (SEND).
These combined account for 83 percent of the total increase expected to hit councils by 2030.
Key drivers for the rising cost of adult social care is the increasing number of adults with disabilities living longer with complex needs, and a large number of people with mental health conditions needing support.
High-cost children’s social care places provided by private companies is increasing the cost of children’s services, with the number of placements costing £10,000 or more increasing from 120 in 2018/19 to 1,510 in 2022/23.
22 Councils Face Bankruptcy
The CCN, which represents 37 councils serving nearly half of England’s population, provided the warning in its submission to the Budget and Spending Review ahead of Chancellor Rachel Reeves’s budget on Oct. 30.A survey of county and rural unitary chief executives conducted by the CCN found that if funding and statutory responsibilities stay the same, 16 local authorities risk declaring bankruptcy by 2026/27, with another six the following year, impacting services delivered to over 16 million residents in England.
Councillor Barry Lewis, finance spokesman and vice chairman of the CCN, said that without support from central government, ministers would have “no choice” but to rethink councils’ statutory responsibilities.
Lewis said: “To meet all their projected service pressures, councils are starring down the barrel of a £54 billion funding black hole. While council tax rises can reduce this deficit, government cannot rely on this alone and local authorities would still be left to find billions each year.
“With the funding gap fuelled by rising costs in adult social care, children’s services, and SEND transport, councils will have to divert even more funding to prop up these services, leaving councils providing little more than care services by the end of this Parliament.”
In its recommendations, the CCN calls for a “substantive injection of resources” to shore up services, followed by “deep and fundamental reform” to address the demands and rising costs for these services.
Debt
Responding to the report, a government spokesperson said it will work with local authorities “to fix the foundations and get them back on their feet by doing the basics right, including providing more stability through multi-year funding settlements, ending competitive bidding for pots of money, and reforming the local audit system.”“We will set out more detail at the next spending review and local government finance settlement but stand ready to speak to any council that is experiencing financial difficulties,” the spokesperson said.
Sigoma’s chairman, Sir Stephen Houghton, said there was a “fundamental mismatch between what local authorities are expected to do and the resources they have to do it.”
Houghton said that underfunded councils are pushed to cut local services and even declare effective bankruptcy.
