£8 billion funding black hole for councils by 2025

The Local Government Association has warned that the government’s next Spending Review will be ‘make or break’ for local services, most of which are already under huge funding pressure.

Beginning its annual conference in Birmingham, the LGA is launching a campaign ahead of the Spending Review to build the case for investment in local services, arguing that it presents the opportunity for long-term, sustained investment in local government that would improve the lives of residents and reduce the pressure on other parts of the public sector.

New analysis estimates that English councils face a funding gap of £7.8 billion by 2025. Moves to plug this gap would just ‘keep services standing still’ and does not include any funding needed to improve services or reverse any cuts made to date. The LGA is warning that local government efforts are no longer enough to protect the local services which are ‘on the brink of collapse’ and facing huge and increasing demand pressures.

LGA Chairman Lord Porter said: “We’ve reached a point where councils will no longer be able to support our residents as they expect, including our most vulnerable – let alone help the country to prosper. Councils have shouldered more than their fair share of austerity and have tried to reduce any impact on residents. But there is only so much they can do and the financial challenges they face are growing.

“Councils now spend less on early intervention, support for the voluntary sector has been reduced, rural bus services have been scaled back, libraries have been closed and other services have also taken a hit. More and more councils are struggling to balance their books and others are considering whether they have the funding to even deliver their statutory requirements. If the government allows the funding gap facing councils and the local services to reach almost £8 billion by the middle of the next decade then our councils and local services will be damaged beyond recognition. The impact on society – all places, all generations, every person – will be hugely damaging. Millions of people will be deprived of the vital local services that help improve quality of life and bind communities together.

“But by properly funding local services and giving councils the powers to work on behalf of their communities, local government can be the driving force for a new chapter in our country’s history. It would ensure residents can live with dignity, achieve their goals and aspire to do more than just get by, as well as helping to reduce pressures on the rest of the public sector.”