Large majority of councils unhappy with finance progress

New research has claimed that 97 per cent of councils are disappointed with the government’s progress in delivering a sustainable funding system for councils.

The 2020 State of Local Government Finance report, published by the Local Government Information Unit, also found that only 20 per cent of councils are confident this will be prioritised going forward.

The 8th annual survey of councils across England found that 97 per cent plan to increase council tax in 2020/21 to make ends meets, 93 per cent planning to raise it by more than 1.5 per cent. Furthermore, despite the increase, 12 per cent believe there is a danger they will be unable to fulfil their statutory duties.
Likewise, 97 per cent plan to increase fees and charges, with 14 per cent being forced to raise them ‘by the maximum possible amount’. Nearly a quarter of councils believe these financial plans will lead to cuts that are noticed by the public. To cope with these immediate and long-term pressures, 75 per cent plan to increase their level of borrowing. Of these, 57 per cent plan to use their reserves with 74 per cent also using their reserves last year. Additionally, 90 per cent of councils with social care responsibilities intend to make use of the social care precept in 2020/21.

As well as social care, children’s services and education was named as the top immediate pressure for council finances, followed by housing and homelessness.

Moving forward, 77 per cent of councils lack confidence in 100 per cent Business Rate Retention as a mechanism to fund local government. Alternative funding models which had support include introducing a local share of income tax (46 per cent), having more freedom to levy other local taxes (40 per cent), a local share of the new digital tax (38 per cent), tourist tax (36 per cent) and a local share of corporation tax (31 per cent). Two thirds think that councils will become more reliant on income from commercial investments and commercialising council services remains a popular income-generation option with two thirds of councils (66 per cent).

Jonathan Carr-West, chief executive of LGiU, said: “The state of local government finances is dire. Eight years later and the message continues to be the same, a broken record. It is simply unacceptable that the government has let things get to this point. Councils deserve better as they work tirelessly, day in and day out, to deliver the best quality services for their residents.

“This isn’t local government asking for more money. This is about a fundamentally flawed system that has been broken for years and the government continually refusing to acknowledge or engage in a proper solution. Sticking plasters will not solve these critical issues. Our social care system is no longer on the edge, it’s fallen off the cliff. Our children’s services aren’t at breaking point, they’re broken. These are issues can not wait another year to be solved. That is why we look forward to working with the new government to develop solutions in the weeks and months ahead.”