Over half of local councils in England could go ‘bankrupt’ over the next 5 years, according to a Local Government Information Unit (LGIU) survey revealed last week. The crisis threatens to devastate our local public services. Libraries, parks, theatres, public toilets, street cleaning services, youth provision and highway maintenance are just some of the many vital local public services affected by this unfolding crisis. 

This is a catastrophe for communities, fourteen years in the making. Councils across England have been grappling with unprecedented real-world cuts to their spending power for well over a decade. 

In 2010 political choices were made at the national level to reduce government grants and transition to a very different funding system. Councils would be expected to raise more of their income locally via Council Tax, business rates and local charges.  Councils serving some of the poorest parts of the country have seen the biggest overall cut to their spending power, leaving a growing number unable to balance the books.

A recent report published by the Special Interest Group of Municipal Authorities (SIGOMA) showed that Government policy has led to a £13.9 billion cumulative cut to local authority budgets since 2010. 

The core spending power of English councils is 18% lower now than it was back in 2010/11, in real terms. For councils serving the poorest populations that figure jumps to 26%.

There are stark examples that expose the grim reality and gross unfairness of government policy. According to the latest data the City of Bradford Council has suffered a £955 funding cut per dwelling, whereas Cambridgeshire is £166 worse off per household. 

Another comparison shows that while Nottingham City Council has been trying to cope with a £950 reduction in spending power per dwelling, on the same measure Oxfordshire County Council is just £96 worse off per residential property.

Despite years and years of tough choices, service reductions and closures, asset sales, increasing Council Taxes and desperate pleas to central government to reform the funding system, many councils are left having to make the most unpalatable decisions to remain legally compliant.

The Perfect but Predictable Storm

This crisis was not only entirely predictable, it was clearly predicted. In 2010, Barnet Council published a budget chart which showed that without government reform of the social care system, their entire annual budget would be used up by adult and children’s care services by 2023.

For a growing number of councils that is exactly what is now happening, with statutory care services for the elderly and for vulnerable children taking up the vast bulk of financial resources, leaving too little left for everything else. 

Not only have councils been hit by growing demand in these service areas they are also now seeing huge increases in people being made homeless. As the higher cost of living takes a toll on households they ultimately present to their local Town Hall in need of emergency or temporary accommodation.

The most recent Department for Levelling Up, Housing and Communities data shows a record 109,000 households living in temporary accommodation. 

What Will this Mean for People?

On the ground in our towns, cities and villages, the political choices of national government, the funding technicalities and formulas have real-world impacts on communities.

For Councils facing a bleak financial outlook and attempting to remain legally compliant with a balanced budget, a range of ever-more-awful actions become necessary: the closure of facilities and public buildings, fewer libraries, streets not adequately maintained or cleansed, growing backlogs of cases in council departments such as planning and children’s services, less action on anti-social behaviour and generally an inability for Councils to be the effective lead organisation of their ‘place.’

The Government announced exceptional financial support for a number of the most distressed councils this week, but the list of councils on the brink is set to accelerate. The growing costs of care services for the elderly cannot be met by council taxes. Structural reform and change at the national level is desperately and urgently needed to stop a cycle of decline in our communities.