The government will reveal a 6.5% rise in financial support for English local governments in a last-ditch effort to prevent them from becoming insolvent.
On Monday, Michael Gove, the secretary of communities, will reveal a support package worth £64 billion. This comes less than two weeks after he received a warning about the possibility of an unusually high number of councils declaring bankruptcy.
The recently announced funding for social care and housing is predicted to be insufficient for the needs of councils. The increase in funding is expected to be lower than the 9.4% increase received in 2023. This information was first reported by the Financial Times.
A recent survey conducted by the Local Government Association showed that approximately 20% of council leaders anticipate the possibility of their council becoming insolvent within the next 15 months.
In 2018, Nottingham became the ninth council to release a section 114 notice, indicating that it is unable to meet its legal obligation to maintain financial stability. This year, Birmingham and Woking have also released section 114 notices.
Based on the LGA’s study, rising expenses and increasing need for services related to child protection, adult social care, and homelessness are pushing councils of all political affiliations to their limits.
Earlier this month, Gove informed the levelling up committee in the House of Commons that local councils that had implemented section 114 orders were experiencing deficiencies in leadership, management, and governance, and had taken unwarranted risks.
He acknowledged his worry about the findings from the LGA’s survey and shared with members of parliament: “It is clear that local government is under considerable financial strain… In the future, it is possible that certain well-run local authorities may encounter even more severe pressures.”
The Local Government Association (LGA) has forecasted that local councils will go over their base funding by £2 billion in the current year.
The leaders of Conservative-controlled councils in the “blue wall” counties of Essex, Hampshire, Kent, and Surrey, as well as Nottinghamshire county council leader and backbench Tory MP Ben Bradley, have signed a letter to Gove asking for additional funding.
According to Shaun Davies, the chair of the LGA, no council is exempt from the possibility of experiencing financial challenges. Our recent survey reveals that numerous councils are now facing the possibility of being unable to fulfill their legal obligation to create a balanced budget and may receive section 114 reports.
According to a government official, “While councils may desire additional resources, this funding package of £64 billion offers them stability to provide essential public services and ensure cost-effectiveness for taxpayers.”
Source: theguardian.com
