A new budget analysis of England’s county authorities reveals that those 37 councils, which cover some 26million people in England, face funding pressures amounting to £3.2bn over the next two years alone, £1.8bn of which is due to projected demand and future inflationary pressures. Leaders of those councils have warned they cannot wait until the government’s comprehensive spending review for badly-needed extra resource.
The warning comes as a separate questionnaire of council leaders, being carried out by the County Councils Network (CCN), shows that unless Government provides additional funding there are rising concerns they will not be able to deliver balanced budgets in the coming years. Unlike the NHS, councils are legally bound to deliver balanced budgets.
Whilst county leaders believe they will be able to deliver a balanced budget this year, 17% were ‘not confident’ and 19% ‘neutral’ on whether they will be able to deliver a balanced budget in 2019/20 without extra resource.
With no detail on the long-term funding plans for councils beyond 2020/21, confidence drops dramatically – with just one third (33%) confident they will be able to deliver a balanced budget that year without an extra cash injection. In total 66% are ‘not confident’ or ‘neutral’.
Download an info graphic summarising the surveys here.
With Government recently committing to an annual £20bn increase in NHS funding, county leaders have called on the new Secretary of State James Brokenshire to begin lobbying the Treasury for new cash.
This comes in the context of local authorities of all colours and sizes warning over the future financial prospects over the next two years. At the weekend Torbay Council became the latest to warn it is rapidly running out of money.
CCN say councils will need a pre-spending review cash injection next year to prevent severe service closures and potential unrest amongst rural MPs, with a longer-term funding settlement and ‘fairer funding’ agreed as part of the Spending Review.
The budget survey – carried out by the Society of County Treasurers of 37 county authorities – estimates that at least £466m of earmarked savings over the next two years will make further ‘visible reductions’ to frontline services.
When exploring the £3.2bn funding pressures, estimated for 2018/19 and 2019/20, 58% (1.861bn) is caused by demand-led pressures. This figure includes projected growth in usage of frontline services, such as adult social care services or children’s social care services, (£1.2bn), and inflation (£661m). The remaining 42% is largely based reduced government grant funding.
To achieve balanced budgets during this current financial year (2018/19) the analysis shows that council tax increases will only meet 36% (£615m) of the budget gap with savings of £703m expected to deliver 41%. Councils predict they will need to use between £150-200m of reserves – designed for one-off ‘rainy day use’ – to balance their budgets this year.
However, the situation looks set to worsen in 2019/20, with frontline service reductions expected to increase by 44% during 2019/20. With reserves already running low, councils are expected to reduce their use by 32%.
In the past three years government has provided last minute emergency funding and greater council tax flexibilities on the eve of councils finalising their budgets in February, following last minute lobbying by council leaders and MPs. Earlier this year, the Government provided £167m of additional resources and allowed council tax increases of 3%.
The CCN say such a ‘hand to mouth’ approach is not sustainable. CCN argues that today’s research shows that it is inevitable that a similar situation will arise this year and are asking the Government to begin preparations for injecting new funding into the system for April 2019 ahead of a longer-term settlement at the Spending Review.
Cllr Paul Carter, chairman of the County Councils Network and leader of Kent County Council, said:
“County authorities have delivered extraordinarily savings over the past eight years of austerity, helping to restore the public finances of this country. But costs outside of our control and demand for services, such as adults and children’s social care, are adding additional unfunded costs of £1.5bn to our budgets over the next two years.
“Recent research clearly shows that councils will need additional support next year in advance of the Spending Review. We will work hard to deliver the savings required this year, but the scope for making deliverable savings has dramatically reduced and decisions for next year will be truly unpalatable if we are to fulfil our statutory duties. Without additional resource, the worst is yet to come.
“Counties want to work with the government. We need to start a sensible conversation with minsters this summer to provide sufficient short-term resources for the next financial year, ahead of a longer-term deal in the Spending Review.”
Cllr Nick Rushton, County Councils Network finance spokesman and leader of Leicestershire County Council, said:
“Austerity has transformed the way the county council works. In Leicestershire, we’ve planned ahead – and by re-shaping services, taking tough decisions, embracing innovation and generating income, we’ve saved almost £200m since 2010.
“With services now cut to the bone, we’ve reached a tipping point. Rising costs and extra demands on our services, outside of our control, such as rising numbers in both adults and children’s social care, are forecast to add further strain to already over-stretched budgets. These pressures combined with funding cuts are a double whammy. A long-term funding shake up is long overdue – and a short-term cash injection is required so councils can keep their heads above water.
“Without extra money, the consequences could be dire. We’ve already asked communities to run our libraries, cut funding for the voluntary sector and are considering reducing the number of children’s centres. But councils also face having to close waste sites, reducing social care and cutting gritting routes. This could create a school place shortage and more anti-social behaviour and traffic congestion – and impact upon NHS waiting lists.
“This latest research reveals a bleak picture, with a shade under one in five leaders saying they’re not confident they can deliver balanced budgets from 2019 without more money, and confidence dramatically decreasing after that. The Government is aware that some councils are already teetering on the edge. And the stark reality is they cannot wait for the comprehensive spending review. This is why we’ve been campaigning for fairer funding. The time has come for less talk and more action from this Government. ”
Notes to editor
– CCN is the national voice for England’s county councils. It represents all 27 county councils and 9 county unitary authorities. Collectively, they represent 26 million people, or 47% of the country’s population. It is a special interest group of the Local Government Association. For more information, visit www.countycouncilsnetwork.org.uk.
– The budget survey included in this press release was carried out by the Society of County Treasurers and analysed by CCN. SCT received a 95% response rate from their 38 member councils, all of whom are based in England’s counties. The results of this survey were based on officers’ indications of their councils’ financial position as of May 2018. This was completed anonymously and questions related to the financial years 2018/19 and 2019/20. The figures included in this release are based on high-level findings from the survey. For more details on the analysis, contact firstname.lastname@example.org.
– Of the £3.2bn ‘funding pressure’ figure, £1.7bn of this is estimated for 2018/19, and £1.5bn is estimated for 2019/20. This figure is based on councils’ predictions as of May 2018 – they are subject to change and increase/decrease based on a variety of external factors, such as inflation, new cost burdens for councils, and government policy.
– The leaders’ confidence survey is being carried out by the County Councils Network. So far, CCN has received a 70% response rate from its 36 members. This survey has been carried out anonymously. For more details on the survey, contact email@example.com.