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Local governments on ‘brink of collapse’ with £8bn funding black hole by 2025

Local governments in England will face a funding gap of almost £8bn by 2025, putting local government “on the brink of collapse,” council chiefs have warned today.

Speaking at the Local Government Association (LGA) conference in Birmingham today, LGA chairman Lord Porter said councils will “no longer be able to support” residents as they expect, adding that the government’s next spending review will be make or break for local services.

Local authorities’ difficulties in wrangling with tight budgets have been making the headlines recently. Last week a shocking eight out of 10 council workers said they lost confidence in the future of council services due to a distinct lack of funding from Whitehall and research from the County Council’s Network found that councils are struggling to balance the books, arguing the “worst is yet to come.”

Now, the LGA have said the government’s insufficient funding so far presents a long-term opportunity for sustained investment in the sector that would improve the lives of residents and reduce pressure on other parts of the public sector such as the NHS.

By 2020, local authorities will have faced a reduction to core funding from the government of nearly £16bn since 2010, the LGA said. Next year, 168 councils will receive no more core central government funding at all.

The lack of funding has had detrimental impacts on key areas including homelessness and adult social care.

Councils are receiving almost 5,000 requests for social care every day. Over the last six months, more than 8,000 people have been affected by care homes or home care providers either pulling out of contracts or closing completely.

“We’ve reached a point where councils will no longer be able to support our residents as they expect, including our most vulnerable,” Lord Porter told crowds at the event.

“Councils have shouldered more than their fair share of austerity and have tried to reduce any impact on residents. But there is only so much they can do and the financial challenges they face are growing.”

Lord Porter added that more and more councils are struggling to balance their books and others are considering whether they have the funding to deliver their statutory requirements.

“The impact [of the funding gap] on society – all places, all generations, every person – will be hugely damaging. Millions of people will be deprived of the vital local services that help improve quality of life and bind communities together,” Lord Porter added.

County Council’s Network finance spokesman and leader of Leicestershire County Council, Cllr Nick Rushton, said: “Councils will have make extremely difficult choices just to stand still and maintain services. In other areas, we will have to cut back on other frontline services, introduce new charges, and stop other vital functions.”

Cllr Rushton noted that confidence is “dropping dramatically,” with just one in three county leaders being able to deliver a balanced budget from 2020.

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Image credit: MarioGuti, iStock images


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