Up to a third of all councils in the UK could run out of money by 2022, according to a survey published by the Local Government Association (LGA) which underlines the crisis facing local councils.
Austerity is still very much a devastating part of everyday life, despite last year chancellor Phillip Hammond declaring it to be over. Local councils up and down the land continue to bare the brunt of brutal funding cuts being imposed upon them from Central Government and Salford is no stranger to those cuts, which are currently standing at £211m with more planned for the future. That means and unprecedented 53% of our local budget has been cut and our City is expected to bare the brunt of even more of those cuts in the future, despite us being the 22nd most deprived authority in the country.
Yes, councils can be more streamlined and services can be delivered more effectively and economically but having such a huge amount stripped away from available spending would challenge any local authority. You can only trim the fat so far before you start to nibble away at the meat. Once that process starts you quickly end up down to the bare bones as is increasingly becoming the case for many authorities.
Although in recent months the council has come under heavy criticism for huge pay rises given to senior council officers in the midst of such devastating cuts: http://www.salfordstar.com/article.asp?id=5090
The Council is required by law to provide a number of statutory services from social care for the elderly to protection of vulnerable children, at the same time there has been a sharp increase on demand for these services which has only added more pressure on an already cash strapped council as they have had to spend more than planned.
Overall, councils across the UK will face a devastating £3.1bn funding cap in 2020/21 which will only rise further to a staggering £8bn by 2024/25. In layman's terms, by next year local councils would have lost 60p out of every £1 they receive from central government, that is 60% stripped from our budget and lost to austerity cuts.
This devastating amount of drain from local budgets will no doubt see some local authorities at breaking point, the LGA survey uncovered that there are genuine fears that some councils will be unable to fund their legal duties by as early as the 2022/23 financial year with almost two thirds expecting to follow suit a few years after.
Councils have increasingly had to both dip into reserves as well as sell assets in order to balance the books but those reserves eventually run dry if you continue to use them, it's not a bottomless pit and should a major crisis hit and that funding not be available, then the impact would be immeasurable, which is why it is important that local councils maintain a comfortable margin as a buffer.
It is becoming increasingly obvious that councils are being expected to rely on council tax and business rates for most of their funding with far less reliance expected on Central Government.
However councils are capped to a 3% increase in council tax and to raise it further would have to win a referendum.
The LGA's chairman Lord Porter said:
“If the Government fails to adequately fund local government there is a real risk to the future financial viability of some services and councils.
“Councils would normally have started their budget-setting planning process but remain completely in the dark about how much funding they will have next year.
“Securing the financial sustainability of local government must be the top priority for the next Prime Minister. Urgent guarantees are needed that councils will have the funding they need to ensure our vital public services survive the uncertainty ahead.
“With the right funding and powers, councils can continue to lead their local areas, improve residents’ lives, reduce demand for services and save money for the taxpayer.”