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£19bn funding shortfall to hit councils by 2025, report finds

Local Authorities face a funding shortfall of £19.1bn over the next five years, which equates to an annual funding gap of £3.8bn, a new report has found.

As reported by AMP’s sister publication, Home Care Insight, The County Councils Network (CCN) report, with analysis from Pixel Financial Management, said the funding gap is based on the assumption that all councils will raise their council tax each year until 2025.

Research found that 133 social care authorities who have published their draft budgets plan to raise their council tax in April, with 18 still to declare their intentions.

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All but two of these are proposing to levy a full 2% social care precept, ringfenced for care services, and of the 133 councils surveyed, 116 plan to raise council tax by the full amount permitted – 3.99%.

The research follows the publication of the Local Government Survey earlier this month, revealed that three quarters of councils in England lack confidence in their financial sustainability, with adult social care being the top long-term pressure.

CCN said the funding gap persisted despite government investment and has called on the new Chancellor Rishi Sunak to commit to the long-term funding of councils.

Cllr David Williams, chairman of the County Councils Network, said: “Council leaders have worked hard to convince ministers of the need to provide councils with additional resources and they have responded with the largest increase in funding for over a decade. This funding is welcome and a lifeline for local services. However, despite this, today’s new financial forecasts for the next five years make tough reading for councils and taxpayers alike.

“This is why the government must use the March Budget to signal that councils will receive a further cash injection in the Spending Review.

“No council leader wants to raise their council tax, especially after residents have faced rises over the last few years, but today’s figures show that we simply do not have a choice. Unfortunately – this pattern is set to continue, but even yearly council tax rises for residents over the next five years still leaves councils with a huge £19bn shortfall, meaning local politicians will need to continue to make really tough decisions to meet rising demand for services.”

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Alex Douglas

The author Alex Douglas

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