16th October 2020
Fifth of councils face financial precipice
One in five (19%) Local Authority Chief Executives predict their council will have to issue a Section 114 notice – the formal declaration that a council does not have sufficient resources to match their spending needs – by the end of next financial year, a Solace survey run in conjunction with BBC Newsnight has found.
A further 16% expect they will join them in issuing s114 notices the following year if no further financial support from the Government is forthcoming.
The numbers are even starker among upper tier councils – those with responsibility for delivering adults’ and children’s social care – with more than a quarter (26%) of respondents from those local authorities predicting that they would need to issue a section 114 notice by the end of 2021-22. That increased by another 17% the following year.
The survey found the average pre-pandemic funding gap for per local authority was just under £4.2m – and that that gap has now quadrupled to £16.1m per authority as a result of both the increased costs and the lower income from business rates, council tax and sales, fees and charges resulting from the Covid-19 pandemic.
Looking specifically at upper tier councils, the average funding gap per local authority at the beginning of this year was £7m, a figure that has now more than trebled to £25.6m per authority.
The survey also asked Chief Executives to indicate the services they expect to suffer the most in terms of quality and level of provision in 2021-22.
The top three service areas named by upper tier Chief Executives were adult social care (85%), roads and highways (71%), and children’s social care (69%).
For district councils, the impact is most likely to be felt on waste (61%), street cleaning (61%), and housing (57%) services.
Martin Reeves, Solace spokesperson for Local Government Finance and Chief Executive of Coventry City Council, said: “As the financial pressures on councils grow day-by-day there has never been a more urgent need for the Government to provide councils with a truly sustainable financial settlement.
“While the additional support provided to date, including the extra £1bn announced this week, is welcome, the total package falls far short of Ministers’ promises at the beginning of the pandemic
to cover all councils’ costs(1). The result is that the funding gap across the local government sector is growing by the month, as the Institute for Fiscal Studies has shown(2).
“Local government has a vital role to play, not only responding to the Coronavirus emergency, but in building back better too, and in steering our communities and local economies through Britain’s departure from the European Union.
“But without the right financial support, councils will be unable to successfully fulfil those crucial roles and the nation’s recovery will be severely undermined.”
Results are based on responses from 132 serving Chief Executives of local authorities in England surveyed throughout August and September.