Counties call for pre-Spending Review cash

England’s largest councils have warned ‘the worst is yet to come’ unless government provides cash-strapped counties with additional funding ahead of the Spending Review.

Budget analysis of England’s county authorities reveals that those 37 councils face funding pressures amounting to £3.2 billion over the next two years alone, £1.8 billion of which are due to projected demand and future inflationary pressures. The County Councils Network (CCN) warns that county authorities will not be able to deliver balanced budgets in the coming years unless the government provides additional funding.

A survey by the CCN reveals that 17 per cent of county leaders were ‘not confident’ and 19 per cent ‘neutral’ on whether they will be able to deliver a balanced budget in 2019/20 without extra resource. Of further concern, only 33 per cent are confident they will be able to deliver a balanced budget beyond 2020/21 without an extra cash injection. In total, 66 per cent are ‘not confident’ or ‘neutral’.

Paul Carter, chairman of the County Councils Network and leader of Kent County Council, said: “County authorities have delivered extraordinarily savings over the past eight years of austerity, helping to restore the public finances of this country. But costs outside of our control and demand for services, such as adults and children’s social care, are adding additional unfunded costs of £1.5 billion to our budgets over the next two years.

“Recent research clearly shows that councils will need additional support next year in advance of the Spending Review. We will work hard to deliver the savings required this year, but the scope for making deliverable savings has dramatically reduced and decisions for next year will be truly unpalatable if we are to fulfil our statutory duties. Without additional resource, the worst is yet to come. Counties want to work with the government. We need to start a sensible conversation with minsters this summer to provide sufficient short-term resources for the next financial year, ahead of a longer-term deal in the Spending Review.”

The budget survey – carried out by the Society of County Treasurers of 37 county authorities – estimates that at least £466 million of earmarked savings over the next two years will make further ‘visible reductions’ to frontline services. When exploring the £3.2 billion funding pressures, estimated for 2018/19 and 2019/20, 58 per cent is caused by demand-led pressures.

This year, council tax increases will only meet 36 per cent (£615 million) of the budget gap with savings of £703 million expected to deliver 41 per cent. Councils predict they will need to use between £150-200 million of reserves to balance their budgets this year. The situation looks set to worsen in 2019/20, with frontline service reductions expected to increase by 44 per cent during 2019/20. With reserves already running low, councils are expected to reduce their use by 32 per cent.