A financial storm is brewing across England as county and unitary authorities grapple with an impending funding crisis, putting essential services at risk.
A recent survey conducted by the Society of County Treasurers, in collaboration with the County Councils Network (CCN), has unveiled a troubling reality – one in 10 councils is on the brink of effective bankruptcy.
The survey, encompassing 41 member councils, exposed a staggering funding gap of £1.6 billion for the current year. Projections for 2024-25 and 2025-26 indicate shortfalls of £1.1 billion and £1.3 billion, culminating in a daunting £4 billion deficit over the next three years.
To address this financial abyss, local authorities are contemplating unprecedented savings of £2 billion over the three-year period, aiming to halve the deficit. However, concerns persist as this leaves a substantial £639 million overspend for 2023-24. The CCN emphasised that much of this overspend, particularly £319 million, is beyond councils’ control, with a significant portion attributed to the surging costs of children’s services.
Barry Lewis, CCN vice-chair and finance spokesperson, voiced the severity of the situation, stating, “A decade of continuous cutbacks, the scale of reductions, and the use of reserves needed to fill the funding shortfall is simply unsustainable.”
This financial crisis is not an isolated incident, as warnings echo across the county councils. Birmingham City Council’s recent declaration of effective bankruptcy in September, leading to drastic spending cuts, serves as a stark example. Local government leaders, fearing a domino effect, stress the need for emergency funding from the government to avert a widespread collapse.
In response, the government highlights its allocation of an additional £5.1 billion to local authorities for the fiscal year 2022/23. It asserts readiness to engage with any council expressing financial concerns. Birmingham City Council, grappling with equal pay claims and a budget-busting IT system, has ignited apprehensions about governance issues that could extend to other well-managed county councils.
In addition to immediate financial aid, councils advocate for longer-term budget settlements to facilitate effective financial planning. Soaring inflation, coupled with escalating demand for critical services like adult social care, education, and highways, exacerbates the challenges faced by these councils.
As the financial storm intensifies, the urgent call for government intervention reverberates, seeking to safeguard the stability of county councils and the crucial services they provide to their communities.
Swindon Borough Council is neither a member of the County Councils Network nor represented among the Society of County Treasurers so this survey does not include them however it does include our neighbouring councils, Wiltshire Council, Oxfordshire County Council, and Gloucestershire County Council – we have reached out to Swindon Borough Council to see if they can offer an insight into the financial security of the borough.
