Councils warn of insolvency risk without big cuts

The BBC report that a recent survey undertaken by the County Councils Network (CCN) shows several local authorities could be forced into ‘damaging’ cuts to services next year to remain solvent.

Only one in five of England's county councils and county unitary authorities are reportedly ‘confident’ of delivering a balanced budget without drastic action.

All 36 of the CCN's members (25 of which are county councils and 11 county unitary authorities) responded to a budget survey which showed that after years of austerity there is limited scope to reduce non-care services such as libraries, bus routes, and transport infrastructure and provision. This means that the most severe reductions are likely to fall on social care services, despite pressures created by Coronavirus.

The survey shows that over the next two years:

• just one in five are ‘confident’ they can deliver a balanced budget next year without ‘dramatic’ reductions to services;
• confidence drops further in 2022/23, with just one local authority confident of setting a balanced budget that year. Over half (56%) said service reductions would impact their efforts to tackle Coronavirus, with 60% stating it will lead to a ‘fundamental reduction’ in frontline services;
• over half of councils said they were planning to reduce access to care packages and/or introduce new charges for services ‘moderately or severely’;
• 27% of councils said they will have to implement moderate or severe reductions to services for children in council care and subject to safeguarding;
• 33% plan moderate or severe cuts to libraries and 24% say the same severity of reductions is planned for bus route subsidies;
• two-thirds said they will not be able to invest in supporting the post-Covid economic recovery;
• 60% of councils said service reductions mixed with council tax increases next year would result in greater economic hardship for residents.

- You can read the full BBC article here

- You can find a report outlining the survey on findings on CCN’s website here.

CCN represents 36 of England’s largest county and unitary councils, and their recent Spending Review submission outlined that as a result of council tax and business rates losses, their members funding gap could increase to £2.2bn next year, up from £1.4bn predicted before the pandemic. So far councils say they have only been able to identify £485m worth of savings, leaving a £1.7bn gap.