CCN Autumn Budget Submission: Situation is rapidly becoming unsustainable, say county leaders

County authorities’ funding black hole will treble to £2.54bn in just four years’ time, with leaders arguing the situation is rapidly becoming unsustainable.

New analysis by the County Councils Network (CCN) shows that this funding gap is driven by the ‘extreme’ rising demands faced by all 37 county authorities, and it calls for government to use the Autumn Budget to urgently inject additional resource over the next two years into the services facing the biggest pressures, ahead the conclusion of the fair funding review and expected introduction of business rates retention.

In total, each county on average will face an additional average funding gap of £70m by 2021, on top of planned service reductions, with social care accounting for £26m of this per authority, and £22m in implementing the new national living wage.

County leaders warn that discretionary services will diminish and that with a sizeable chunk of statutory services underfunded, very “difficult, painful and unpopular decisions” will have to be made unless new resource is found.

Figures released last week show that counties have the lowest unallocated reserves as a proportion of their net expenditure (4.7%).

CCN analysis also shows that should the government break the public sector pay cap for local authority employees with a 2% rise it would cost £297m per year in counties. County leaders say they support the principle, but it must be fully-funded by government.

CCN’s Budget submission also advocates:

• That the Treasury provides the Department for Communities and Local Government (DCLG) with the resource to extend Transition Grants until 2021. Counties face the harshest drop amongst upper-tier councils in Revenue Support Grant (RSG) by 2021, on average losing 93% of grant funding, with 14 counties falling into negative RSG. Extending Transition Grants is currently being considered by DCLG, and CCN argues this will allow counties to deliver services whilst an alternative way of funding councils is finalised.
• Removing the referendum limit on council tax levels, provided counties receive a fairer funding deal, to limit further inequality in council tax levels. At the same time, explore regulatory changes with county authorities, including flexibilities to mean test for free home to school transport services, and set small charges for concessionary travel and household waste recycling centre visits.
• Argues the forthcoming Industrial Strategy Whitepaper must address concerns over the narrow focus on city regions and provide a prominent role for counties empowered counties. More widely, Government economic policy must recognise the specific impact of Brexit on areas such as manufacturing and imports, with counties accounting for the most significant proportion.
• Government delivers on the manifesto promise of producing a ‘common devolution framework’, providing clarity on local government reorganisation and endorsing counties as ‘strategic authorities’ alongside the mayoral combined authorities as a practical means of delivering devolution in county areas, with a suite of growth and financial powers drilled down to those authorities, allowing them to lead local industrial strategies.

 Cllr Paul Carter, CCN Chairman said:

“Counties have had the greatest financial challenges in the last five years and this evidence adds to the case.

 “We are reaching a point where we are 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 Ministers across government that we need 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.

 “CCN’s submission sets out a range of policies to help quell the inevitable impact of staring a funding black hole of £2.54bn in the face. It also contains ambitious proposals to kick-start county devolution, calling on the government to be bold and endorse counties as strategic authorities, giving us the powers to be the masters of our own economic destinies.”

 Notes to editor

• Unfunded county cost pressures by area, and total cost pressures 2016-2021, based on the Society of County Treasurer’s survey of CCN member councils: