\n<\/p>\n
Local authorities in England and Wales have warned their finances are at \u201cbreaking point\u201d with more councils expected to fall into bankruptcy in future, as they face a nervous wait to discover their government funding this month.<\/p>\n
Council leaders expect changes to annual funding arrangements will result in steep cuts for many local authorities, preventing many from balancing their books and providing basic services to citizens.<\/p>\n
Amid a crisis in local authority funding, 29 councils have already been unable to meet their financial obligations without special government loans, including Croydon, Thurrock in Essex and Birmingham.<\/p>\n
Norfolk county council\u2019s deputy leader for finance, Andrew Jamieson, said the number of local authorities unable to meet their statutory obligations was likely to grow when the government publishes a new funding settlement this month.<\/p>\n
\u201cWe are often accused of crying wolf, but local authorities are reaching breaking point now,\u201d he said. \u201cThe money\u2019s not there. There are bound to be some more councils that cannot meet their obligations.\u201d<\/p>\n
A spokesperson for the Local Government Association, which represents councils across England and Wales, said: \u201cCost and demand pressures are unrelenting, particularly in key demand-led services such as children\u2019s social care, adult social care, homelessness and home-to-school transport for children with special educational needs (Send).\u201d<\/p>\n
They added: \u201cCouncils need a significant increase in overall funding to stem the emerging risk of system-wide financial failure and to ensure that councils can meet demand for the vital services needed by their communities.\u201d<\/p>\n
The government agreed a three-year deal for local councils as part of a spending review in the summer. But the formula used to allocate the funding has yet to be published.<\/p>\n
The government said the outcome of its \u201cfair funding review 2.0\u201d, which is expected to be published on 17 December, will help councils cope with high levels of deprivation.<\/p>\n
Jamieson, a member of the ruling Conservative group on Norfolk county council, said revisions to the funding formula would leave many councils with high levels of need worse off. While he expects to close a \u00a362m spending gap with further efficiencies, his council still has a \u00a36m spending gap that could only be closed through cuts to services or raising council tax from 3% to the 4.99% cap.<\/p>\n
There are councils ranked as having higher levels of social deprivation, but 26% of Norfolk\u2019s population is aged over 65 and many need local authority support, he said.<\/p>\n
Labour insiders said the funding changes were a response to Rishi Sunak\u2019s redrawing of the rules when he was prime minister in favour of wealthier Conservative counties and districts.<\/p>\n
They said Labour introduced a recovery fund last year to redress the balance, which would be made permanent in the fair funding 2.0 settlement. They added that funding allocations on 17 December would prevent any councils from going bust in 2026-27.<\/p>\n
A spokesperson for the Ministry of Housing, Communities and Local Government said: \u201cLocal leaders set their own council tax levels with increases limited to 5% without support from a local referendum, and we\u2019ll continue to give taxpayers the final say on increases.\u201d<\/p>\n
Despite the extra cash for poorer areas, many Labour councils expect to make difficult decisions before agreeing a budget for 2026-27.<\/p>\n
Hartlepool borough council said last week that it planned to freeze council tax bills, but it still needed to close a \u00a39m deficit, including \u00a33m from the cost of the tax freeze.<\/p>\n
The council\u2019s leader, Pamela Hargreaves, said she wanted to balance the 2026-27 budget \u201cin a way that does not increase the council tax burden on already hard-pressed families\u201d.<\/p>\n
Jamieson said: \u201cWhen the government says local councils are receiving funding increases worth more than 1% after inflation, we need to remember that includes the income from a maximum 4.99% rise in council tax.\u201d<\/p>\n
Council tax receipts accounted for 42% of Norfolk\u2019s income four years ago and 60% this year, he said, after steep increases under Conservative and Labour governments.<\/p>\n
\u201cThe way local government is funded is not sustainable. Since 2012, we have made savings of \u00a3652m and making those savings gets harder each year.\u201d<\/p>\n
Joanne Pitt, a senior policy adviser at the local authority accountancy body Cipfa, said borrowing by local authorities had reached \u00a31,500 per person and was on course to rise further.<\/p>\n
Most of the 29 authorities given exceptional financial support \u2013 a temporary loan from the government \u2013 were rolling over the loans to stay afloat, she said.<\/p>\n
\u201cLocal authorities are not in a position to pay back loans, and that is even more the case for the 30 receiving exceptional support,\u201d she said.<\/p>\n
Cornwall council will be among the first local authorities to publish a budget for the 2026-27 financial year when councillors sign off a first draft next week.<\/p>\n
Expected on Tuesday, the document will show how the council has saved between \u00a340m and \u00a370m to control spiralling costs, mostly due to rising bills for children\u2019s special needs and elderly care. The cuts come after \u00a350m of savings were made in the previous year.<\/p>\n
London Councils recently warned that boroughs in the capital were grappling with a \u00a31bn funding shortfall this year, and a cumulative budget gap of \u00a34.7bn across 2025-26 to 2028-29.<\/p>\n
The group forecasts that half of boroughs could require emergency financial support by 2028 to avoid bankruptcy.<\/p>\n
John Merry, the deputy mayor of Salford and chair of the Key Cities group of councils, which includes Southampton and Sunderland, said: \u201cOur survey of city leaders from across the country has shown that councils are dealing with impossible choices in the face of spiralling costs for social care and temporary housing, among other vital services.\u201d<\/p>\n
The Labour councillor said 60% of councils expected to use asset sales next year to close deficit gaps, adding: \u201cThese are not decisions that any politician wants to make and offer a stark indicator of the impact of over a decade of chronic public sector underfunding.\u201d<\/p>\n
Mike Cox, the head of finance at Bournemouth, Christchurch and Poole council, said local authorities faced the prospect of huge funding cuts being levied only weeks before budgets needed to be agreed.<\/p>\n
\u201cUncertainty from central government is making a difficult situation worse. Councils are left to choose between raising taxes, selling assets, and cutting essential services. We need clarity and a fair funding settlement now. The fair funding review appears to be anything but fair,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Local authorities in England and Wales have warned their finances are at \u201cbreaking point\u201d with more councils expected to fall into bankruptcy in future, as they face a nervous wait to discover their government funding this month. Council leaders expect changes to annual funding arrangements will result in steep cuts for many local authorities, preventing<\/p>\n","protected":false},"author":1,"featured_media":36367,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48],"tags":[4559,1515,311,8995,558,2755,6558,123,1952],"class_list":{"0":"post-36366","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-politics","8":"tag-authorities","9":"tag-breaking","10":"tag-england","11":"tag-finances","12":"tag-government","13":"tag-local","14":"tag-point","15":"tag-wales","16":"tag-warn"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/36366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36366"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/36366\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/36367"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}