Unison has warned that a £5bn black hole in public finances means that some UK councils will not be able to provide even basic services in the coming year.
The Isle of Wight is set to make savings of £3.9m from their £178.8m budget in 2023/24.
However, over the following two years, it’s predicted they’ll need to make almost another £9m in savings/cuts to services.
A study carried out by the BBC Shared Data Unit has found the average council now faces a £33m predicted deficit by 2025-26 – a rise of 60 per cent from £20m two years ago.
Emergency support
Unison said it meant some councils would not be able to offer the “legal minimum of care” next year.
Six councils will receive emergency support from the central government in the current financial year.
| Council | Amount agreed in principle for 2023-24 |
|---|---|
| Thurrock | £180.2m |
| Croydon | £63m |
| Kensington and Chelsea | £51.8m |
| Cumberland | £40m |
| Slough | £31.6m |
| Westmorland and Furness | £26m |
The Local Government Association said inflation, the Living Wage and energy costs were adding billions to budget books.
Together, the 190 authorities surveyed said they would need to find £5.2bn to balance the books by April 2026 – even after making £2.5bn of cuts this year.
How much are councils saving in total?
Highlights from the BBC study revealed:
- Councils in the UK plan to make £2.5bn worth of savings in the 2023-24 financial year.
- At least £466.8m of that (18 per cent) is made up of savings from adult social care services in England and Wales as councils in Scotland and Northern Ireland do not have responsibility for social care.
- Out of the 190 councils in the study, 179 (94 per cent) have budgeted to make savings for 2023-24.
- The average planned savings per analysed council are £13.9m, a 36 per cent increase since our last study in 2021-22 (£10.2m).
Making the most savings
Hampshire County Council is set to make the most savings overall in the UK (£80m), followed by Surrey (£69m) and Norfolk (£59.7m).
However, as a proportion of the net budget, Shropshire is set to make the most savings this year. Its £51.4m schedule of savings amounts to 20.1 per cent of its annual net budget.
Use of reserves
On top of the savings, councils plan to use £1.1bn worth of reserves to balance budgets this financial year. Among them, Bradford is planning to use £52.8m worth of reserves – the largest total in the UK and nearly 12 per cent of the council’s yearly net budget.
As a proportion of the net budget, Shetland Islands is set to use the most reserves. Its planned use of £36.7m in reserves amounts to nearly 24 per cent of its net budget.
The Isle of Wight has no plans to dip into its reserves in the current financial year.
Council tax
Some 75 per cent of analysed councils in England have raised council tax by at least 4.99 per cent for 2023-24.
The average raise was 4.79 per cent, with the maximum increase recorded in Croydon (14.99 per cent), Slough (9.99 per cent) and Thurrock (9.99 per cent).
The Isle of Wight council raised their council tax in this financial year by 4.99 per cent.
Short: Council finances are in the direst of states
Mike Short, Head of Local Government, Unison, said,
“Council finances are in the direst of states. As the government tightens the squeeze on local budgets, services either vanish or are scaled down dramatically.
“Cash-starved councils have had to go cap in hand to ministers for emergency support or raid already depleted reserves in a desperate attempt to balance the books.
“This is not a sustainable situation. Local authorities simply don’t have the funds to provide even statutory services. That’s why social services directors warned recently that councils probably can’t offer even the legal minimum of care support next year.
“Council employees have had enough. Pay rises haven’t kept up with the cost of living. And staff want to take pride in their jobs and run good quality services for local residents. This is no longer possible. It’s no wonder so many are quitting for pastures new.
“As staff leave, there’s no money to replace them, which piles on the pressure for those remaining. In social work, staff shortages have led to excessive workloads, putting vulnerable families at risk.
“Decent, well-resourced public services are essential. They’re a driver of economic growth and the fabric holding communities together.
“Cuts are a false economy as the dreadful experiment with austerity has more than shown. It’s time for a fair funding settlement, both for now and future years.”
Davies: Continuously hampered by one-year funding settlements
Cllr Shaun Davies, Chair of the Local Government Association, said,
“Inflation, the National Living Wage, energy costs and ongoing increasing demand for services are all adding billions of extra costs onto councils just to keep services standing still.
“Councils are having to make cutbacks to services to meet their legal duty to balance the books this year and using reserves to plug funding gaps. Councils hold reserves so they can plan for the future and deal with known risks. They can only be spent once and using reserves is not a solution to the long-term financial pressures that councils face.
“Councils’ ability to mitigate these stark pressures are being continuously hampered by one-year funding settlements, one-off funding pots and uncertainty due to repeated delays to funding reforms.
“The Government needs to come up with a long-term plan to sufficiently fund local services. This must include greater funding certainty for councils through multi-year settlements and more clarity on financial reform so they can plan effectively, balance competing pressures across different service areas and maximise the impact of their spending.”
Hillier: Local government finance may be approaching a tipping point
Dame Meg Hillier MP, Chair of the Public Accounts Committee (PAC), said,
“The PAC warned three years ago of the extreme risks inherent in commercial property investments made by cash-strapped councils. These findings indicate that local government finance may be approaching a tipping point. There are only so many more savings that can be made to services relied upon by local communities, and it is alarming to see such a steep increase in councils chipping away at their own precious reserve funds.
“Feeding into this picture, our Committee recently warned that the risk of financial issues being missed is increased by delays in local audits. This hinders accountability for £100bn in local government spending, and the rot risks spreading to NHS and central government.
“Our Committee found in 2021 that local government income was £8.4 billion less than in 2010–11 in real terms at the start of the pandemic. Multiple high-profile cases of councils reaching crisis point in recent months is the logical endpoint of that status quo. Both those cases and these findings should have the dashboard flashing red across the board for the Government.”
This article is from the BBC’s Shared Data Unit, which News OnTheWight is part of. Some alterations and additions may have been made by News OnTheWight. Ed
Image: pschadler under CC BY 2.0
