Local services ‘on brink of collapse’ due to £8bn funding gap, LGA warns

A Local Government Association (LGA) report on local government funding, published today (July 3), estimates councils in England face a funding gap of £7.8bn by 2025.

They say plugging this gap would just keep services standing still and does not include any funding needed to improve services or reverse cuts.

The figures have been released to coincide with their annual conference, which begins today in Birmingham.

The report says that by 2020, local authorities will have faced a reduction to core funding from the Government of nearly £16bn since 2010. That means that councils will have lost 60 pence out of every £1 the Government had provided to spend on local services.

It adds that next year, 168 councils will receive no more core central government funding at all, with many local services ‘on the brink of collapse.’

LGA Chairman Lord Porter said:

‘We’ve reached a point where councils will no longer be able to support our residents as they expect, including our most vulnerable – let alone help the country to prosper.

‘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.

The LGA has called for sustained investment in local government that would ‘improve the lives of residents and reduce the pressure on other parts of the public sector, such as the NHS.’

In his 2018 Spring Statement, Philip Hammond committed to increasing public spending if public finances improve. However, local government leaders say the Chancellor’s spending review must recognise the urgent need to focus on fairer funding for local services.

Lord Porter added: ‘Councils now spend less on early intervention, support for the voluntary sector has been reduced, rural bus services have been scaled back, libraries have been closed and other services have also taken a hit. More and more councils are struggling to balance their books and others are considering whether they have the funding to even deliver their statutory requirements.

‘If the Government allows the funding gap facing councils and the local services to reach almost £8bn by the middle of the next decade then our councils and local services will be damaged beyond recognition.

‘The impact 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.

‘But by properly funding local services and giving councils the powers to work on behalf of their communities, local government can be the driving force for a new chapter in our country’s history. It would ensure residents can live with dignity, achieve their goals and aspire to do more than just get by, as well as helping to reduce pressures on the rest of the public sector.’

At the annual conference, which runs from today until July 5, the LGA will publish a series of papers aimed at helping build the case for long-term, sustained investment in local government, ahead of next year’s Spending Review. Topics will include housing, planning and homelessness, funding, improving schools, Brexit, the future of non-metropolitan England, and adult social care.