Almost all councils in England intend to increase council tax this year, with more than one in ten warning of possible cuts to essential services as they struggle to balance the books, according to the most comprehensive annual survey of local authorities.
The financial pressure facing local authorities after a decade of central government funding cuts will also force three-quarters of councils to increase borrowing, according to the survey of senior officials at 152 of England’s 343 councils by the Local Government Information Unit and Municipal Journal.
From April, 97 per cent of the councils that responded said they planned to increase council tax along with fees and charges for services such as parking and leisure facilities, according to the 2020 State of Local Government Finance report.
Despite plans to increase their funding streams, 12 per cent expressed concerns that they would be unable to fulfil their statutory duties, which include housing the homeless and providing care for the elderly and vulnerable children.
“The state of local government finances is dire,” said Jonathan Carr-West, chief executive of LGIU. “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.”
Since 2010 the government has cut central grants to local authorities by 60 per cent, or almost £16bn, according to the Local Government Association.
In the survey, children’s services and education was identified by 36 per cent of respondents as the area exerting the biggest pressure on finances in the short term, followed by adult social care (24 per cent).
More than half of councils plan to tap into their reserves again after almost three-quarters did so last year. Nine out of ten councils with social care responsibilities — county and municipal boroughs — expect to add the additional 2 per cent precept to council tax to pay for social care.
The government has given an additional £1bn to councils to spend on social care in 2020-21 because of rising demand. But 98 per cent of survey respondents said that they were unhappy with progress towards a comprehensive social care policy to relieve the pressure.
Three-quarters of respondents also doubted that the Conservative government would prioritise its election promise for cross-party co-operation to find a long-term solution to the crisis in social care.
Mr Carr-West urged the government to act. “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 that cannot wait another year to be solved.”
The government is increasingly shifting the responsibility of paying for local services to local taxpayers. The ministry of housing, communities and local government said councils could spend a record £49.1bn next financial year. But it is only providing £1.3bn of the £2.9bn annual increase, with the rest coming from council tax rises.
“The funding plans provide certainty for councils who are responsible for delivering the services their communities need and protect residents from excessive council tax increases,” the ministry said.
More than 160 councils now receive no revenue support grant from Whitehall at all. However, a reform of business rates, which are currently collected locally but redistributed to help less affluent areas, will from April allow councils to retain most of the growth in income from rates, benefiting the more prosperous local authorities.
