Increased costs to put pressure on council budgets

According to research by the Local Government Association (LGA), inflation, rising energy prices and National Living Wage pressures could add £3.6 billion to council costs in 2024/2025.

During their Annual Conference in Harrogate, the LGA has warned of cuts to essential services, which could present a serious risk to the financial viability of some councils and their services.

The LGA says neither central or local government could have predicted the sharp rise in inflation and energy prices, which it has labelled an unprecedented crisis, when the Government finalised the local government finance settlement and councils set their budgets earlier this year.

The research says that this year alone, inflation, energy prices and an increased National Living Wage will add £2.4 billion of costs to council budgets and this will rise to £3.6 billion in 2024/2025. This is leading councils to discard financial plans created in March and potentially make cuts to local services in order to balance their books. Services at risk include bin collection, potholes, care for older and disabled people, early intervention, support for low-income households and homelessness prevention.

With the background of the cost-of-living crisis, demand for council services continues to rise as the cost of providing them also increases.

The LGA has called on the government to ensure that councils have the needed resources to cope with rising costs and continue to provide services to help communities recovering from the pandemic and enduring the cost-of-living crisis.

LGA chair, Cllr James Jamieson said: “Soaring inflation, energy prices and National Living Wage pressures are putting council services at risk. Budgets are having to be reset with potential cuts to the essential services people rely on, in the middle of a cost-of-living crisis.
“Inflation is not going to come down overnight. As our analysis shows, the impact on our local services could be disastrous. This will stifle our economic recovery, entrench disadvantage, and undermine government ambitions to level up the country.
“Local government remains the fabric of our country, as has been proved during the hugely challenging few years we have faced as a nation. Only with adequate long term funding – to cover increased cost pressures and invest in local services - and the right powers, can councils deliver for our communities, tackle the climate emergency, and level up all parts of the country.”

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