Services could face ‘breaking point’ if funding black hole is not plugged, councils say

Local authorities say they are reaching ‘breaking point’ as they struggle to balance the budget against a ‘£2 billion funding black hole’.

The warning comes from the County Councils Network (CCN), which represents 37 of England’s local authorities, who say even well-managed authorities of all shapes, sizes and political control could reach breaking point.

Currently, more than two-thirds (68%) of the average county authority budget is used on adult social care and children’s services. However, councils warn this figure will only grow if there is no uplift in funds in the forthcoming Spending Review. If this is the case, local authorities say they “will have no alternative but to have an honest discussion with government and carefully consider what services can reasonably be delivered above the statutory minimum.”

The 37 county and unitary councils in England overspent on their children’s services budgets by £360m last year, with demand showing no signs of dropping. The number of children in care in county areas has increased by 12% since 2019 – higher than anywhere else – and costs of delivering school transport for special educational needs pupils have doubled to £800m in the same timeframe.

The CCN is launching its ‘Manifesto for Counties’ ahead of the General Election and is calling on the next government to set out increased and long-term funding for councils in its forthcoming Spending Review. They say, however, that this must be coupled with reform in the services that are under the most pressure currently.

“Council services in county areas enhance the lives of 26m people, yet those councils face a funding black hole of £2bn over the next two years. Whoever wins power, the next government inherits a situation with council finances that are extremely precarious,” the leaders of the CCN’s Conservative, Labour, Liberal Democrat and Independent groups, said in a cross-party statement.

“Without extra funding and fundamental reform, highly valued local services could reach breaking point, and even well-run local authorities could struggle to balance the books. The next government must urgently set out how it will fund councils once in office, while also adopting our bold and brave agenda for reform.

“Our cross-party Manifesto for Counties does not simply make blank cheque arguments. The council services under the most pressure will only become sustainable in the future if they are coupled with root and branch reform. Councils want to be key partners in this process: setting out solutions and then leading on implementing reform across a host of areas, such as children’s services, SEND provision, and school transport.”