Economy and Infrastructure

08.02.18

Councils across the UK fear for financial stability after Northamptonshire collapse

Around 80% of councils are concerned about their own financial stability following Northamptonshire County Council’s announcement of the first major authority spending ban in 20 years.

The latest State of Local Government Finance Survey – released by the LGiU and MJ – suggests that economic uncertainty is rife among councils, with 95% of authorities across the country preparing to raise taxes in the coming year.

Reduced funding from central government combined with increased complexity and demand for services, especially social care, has driven around 25% of councils to cut funding to frontline services, the review said.

While adult social care remains the top long-term concern of authorities, children’s services have overtaken it as the top immediate pressure – as representatives warn provisions could be in danger of cuts.

Overall, councils are calling for the government to assure that 2017 levels of funding continue for at least 3 years, giving them the ability to plan effectively in the medium term and while the government comes to terms on business rate receipts.

Jonathan Carr-West, chief executive of the LGiU, said the results of the survey show that councils are “on the edge” and have to increase tax in order to keep up with demand.

“The system is unsustainable and needs far more fundamental reform than is presently on offer,” Carr-West explained.

“It’s simply not acceptable that we don’t know how local government will work post 2020. Councils are calling for assurances around funding for the next three years and for a fundamental redesign of the finance system. At present, government is offering neither. That has to change.”

Last week, Northamptonshire CC was forced to issue a section 114 spending ban – the first of its kind in 20 years – but the LGiU said this could be just the "tip of the iceberg" for nationwide local government funding.

The struggling authority said it was in a “bleak financial position” and has even suggested selling off its new £53m headquarters building or becoming a unitary council, as some of the only methods for dealing with the vast debt.

Top image: Lovattpics

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