Higher taxes and cuts to services likely next year, councils warn, after government funding revealed

Councils in England have warned they could be forced to cut services and implement tax rises for the coming financial year as they criticized the level of central government funding.

The Department for Leveling Up, Housing and Communities (DLUHC) has announced that funding available to councils will rise to more than £64bn. next year, up from £59.7bn. in 2023/24.

It said councils will receive a minimum 3% increase in core consumption power – the amount councils need to use from a combination of public grants, council tax and business rates.

Latest policy: ‘The government is taking the scandal incredibly seriously’ – Prime Minister

But councils across the country have already warned that the settlement does not go far enough to help councils facing bankruptcy due to rising costs and demand pressures.

They have called on the government to provide emergency funding to delineate crucial frontline services.

Councils are struggling across the country

Since 2020, seven councils have issued at least one Section 114 notice, which means that all new spending – with the exception of protecting vulnerable people and statutory services – must stop immediately.

Last week Cheshire East Council warned that it could be forced to declare bankruptcy after it spent £11m preparing HS2 before the government’s “devastating” decision to cancel the northern section in October.

It follows Nottingham Council issued a Section 114 notice last month, with a warning from the finance director that it was unable to deliver a balanced budget for this year, which is a legal requirement.

Birmingham City Council also issued its own 114 notice in September after being hit with a £760m bill to settle equal pay claims.

In its interim council finance settlement for 2024-25, the government said it was “making £1bn available in additional grant funding” for social care for the coming financial year compared to 2023-24.

It said councils will be able to increase council tax by up to 3% without a local referendum, with a further 2% for those responsible for social care for adults and “further flexibility” for some authorities.

The DLUHC also revealed that it had made it clear that it does not support councils using “four-day week” arrangements after South Cambridgeshire District Council extended a four-day week trial period until the end of March next year.

The government added that it was investigating potential financial penalties for councils that continue to adopt the practice after 2024-25.

Please use the Chrome browser for a more accessible video player


Nottingham Council has gone bankrupt

‘No choice’ about ‘higher council tax increases’

The County Councils Network (CCN), which represents England’s largest councils, said county authorities would be “bitterly disappointed” by the announcement.

Councilor Barry Lewis, finance spokesman and deputy chairman of CCN, said: “The announcement of the interim council finance settlement today will be bitterly disappointing for England’s county authorities.

“With no additional funding announced, our council will have no choice but to implement more severe cuts to services and to charge higher council tax increases.

“This will undoubtedly be a double whammy for residents during a cost of living crisis, while an increasing number of local authorities will struggle to deliver a balanced budget next year.”

Read more:
Why do municipalities go bankrupt?
Councils ‘running out of road’ to bridge £4bn

‘Services communities rely on every day face cuts’

Councilor Shaun Davies, chairman of the Local Government Association, said councils in England were facing a £4bn funding gap. over the next two years.

“The funding increase announced by the Government today assumes that all councils will increase their tax bills by the maximum allowed in 2024/25,” he said.

“This means councils are once again faced with the difficult choice of raising bills to get desperately needed funding.

“Today’s settlement does not provide enough funding to meet the severe cost and demand pressures that have left councils of all political colors and types warning of the serious challenges they face in setting balanced budgets next year.”

He added: “It is therefore inconceivable that the Government has not provided desperately needed new funding for local services in 2024/25.

“Although councils are working hard to reduce costs wherever possible, this means that the local services our communities rely on every day are now facing further cuts.”

Leave a Reply

Your email address will not be published. Required fields are marked *