Councils face £19bn shortfall, research finds

Councillor David Williams, chairman, CCN

Local authorities face a funding shortfall of £19.1bn over the next five years, which equates to £3.8bn each year, research has shown.

A County Councils Network (CCN) report, with analysis from Pixel Financial Management, said a funding gap persisted despite government investment. It has called on the new Chancellor Rishi Sunak to commit to the long-term funding of councils.

Councils are setting out further rounds of reductions and savings as part of their February budgets, and will have to do so over the next four years to fill the £19bn funding black hole, the CCN said.

Analysis of 133 councils which have published their draft budgets out of 151 social care authorities showed:

  • All councils plan on raising council tax in April – 133 local authorities, with 18 still yet to declare. All but two of these are proposing to levy a full 2% social care precept, ringfenced for care services.
  • Of these councils, 116 plan to raise council tax by the full amount permitted – 3.99%.

In October the government set out its 2020/2021 plans for local authority funding, which was estimated to rise in real terms by 4.3% to £49.1bn, an increase of £2.9bn.

As part of this local authorities would be able to access an additional £1.5bn of funding for adult and children’s social care.

CCN chairman Cllr David Williams said: ‘Council leaders have worked hard to convince ministers of the need to provide councils with additional resources and they have responded with the largest increase in funding for over a decade. This funding is welcome and a lifeline for local services. However, despite this, today’s new financial forecasts for the next five years make tough reading for councils and taxpayers alike.

‘This is why the government must use the March Budget to signal that councils will receive a further cash injection in the spending review.’

In its Budget submission, CCN urged the government to ‘prioritise investment to meet rising demands and costs in children’s social care’.

It also wanted to see a social care white paper within the next six months, supported by a national discussion and cross-party approach to consider the funding options for adult social care, including younger adults.

‘Reforms should also seek to encourage preventative approaches locally to reduce or mitigate demand for social care, such as reforming the planning system to encourage the development of more extra care housing for older people,’ it said.

The Budget is due to take place next month.