Urban Councils Warn of Financial Failure in Letter to Angela Rayner
Councils in some of the UK's poorest urban areas have cautioned the government that the overwhelming majority will struggle to meet their budget targets in the next financial year.
Councils in 48 urban authorities, representing 14 million constituents in England, have urged Deputy Prime Minister Angela Rayner to increase their core spending power in 2025-2026 by 7 percent. The measures will help local authorities to address the immediate funding gap, according to the Special Interest Group of Municipal Authorities (Sigoma).
In a letter to Rayner, the group's chair Sir Stephen Houghton spoke about a "fundamental mismatch between what local authorities are expected to do and the resources they have to do it."
In an attempt to raise money, councils turn to council tax, as their main source of locally raised income. However, poorer areas are able to generate less revenue from council tax.
He has called for council tax equalisation in the local government finance settlement and longer-term certainty to enable councils to plan better.
In children's social care services, 71 percent of councils said that standards will fall below-required standards, while 24 percent said they would fail to deliver the service.
Local authorities also reported low confidence in delivering adult social care, 65 percent saying they could not maintain the required standards and 18 percent warning of service failure.
A finance director in one council said that despite providing significant budget growth for 2024-25 to overspending areas, significant overspending was still likely.
Shortly after their general election victory, Labour renamed the renamed the Department for Levelling Up, Housing, and Communities, returning to its earlier title of the Ministry of Housing, Communities and Local Government.
"My Cabinet Colleagues and I also understand that all too many councils are facing financial strain and have been left balancing new obligations with higher costs and interest rates after a decade of financial mismanagement from the centre. Rest assured, we will ensure that you have the resources to deliver new devolved powers and functions."
"With 18 councils already relying on Exceptional Financial Support from the Government to balance their books this year, we are warning that there is a growing risk of systemic financial failure," the LGA said.
PA Media contributed to this report.
