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Counties face mammoth £2.5bn funding ‘black hole’ by 2021

County authorities could suffer from a funding gap of £2.5bn by 2021, a new report released today has suggested.

Analysis suggests that rising demand across the 37 county councils has contributed to a growing “black hole” between funding and application.

The figures – provided by the County Councils Network (CCN) – break down as a £70m shortage per authority within the next four years.

Adult social care is expected to account for £26m of the overall problem following recent calls on Jeremy Hunt to drop “undeliverable” targets for DTOCs in rural areas.

An extra £22m of the total figure will also come from the implementation of the new national living wage.

The report goes on to show that should the government break the public sector pay cap for local authority employees with a 2% rise, it would cost counties £297m each year. Although leaders say they support the principle, they maintain that it must be fully-funded by central government.

The CCN has advocated for increased resources to the DCLG to extend transition grants until 2021.

“Counties have had the greatest financial challenges in the last five years and this evidence adds to the case,” commented Cllr Paul Carter, CCN chairman.

“We are reaching a point where we have to consider difficult, painful and unpopular decisions next year to deliver balanced budgets, which will reduce and remove frontline services highly valued by our residents.

“The government has said it is in ‘listening mode’, and I, and my fellow county leaders, will be asking m ministers across government for additional help and support in this Budget or we will all face some very severe consequences in the future. The situation can’t go on.”

The analysis also deals with further devolution plans, arguing for the upcoming Industrial Strategy Whitepaper to address concerns over the narrow focus on city regions and lack of emphasis on counties.

In addition, the CCN has called on Westminster to deliver on the promise of a ‘common devolution framework’. The group argues that county councils need similar powers to those of city ‘strategic authorities’ with greater control over approaching industrial policy and finance.

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