New research out today reveals near universal
disappointment (97%) in the Government’s progress in delivering a
sustainable funding system for councils. The
2020 State of Local Government
Finance report (conducted by the LGiU and MJ)
also found that only 20% of councils are confident this will be
prioritised going forward.
The 8th annual survey of councils across England found
nearly all councils (97%) plan to increase council tax in 2020/21
to make ends meets, with most (93%) planning to raise it by more
than 1.5%. Despite the increase, one in ten councils (12%)
believe there is a danger they will be unable to fulfil their
statutory duties.
As they face another year of financial uncertainty and
continue to await the outcome of the Fair Funding Review, nearly
all councils (97%) plan to increase fees and charges, with some
being forced to raise them ‘by the maximum possible amount’
(14%). Nearly a quarter of councils (23%) believe these financial
plans will lead to cuts that are noticed by the public.
For 2020/21, children’s services and education was named as
the top immediate pressure for council finances (36%), followed
by adult social care (24%) and housing and homelessness
(18%). Adult social care was named as the top long-term
pressure for council finances (37%), followed by children’s
services (21%) and housing and homelessness (15%).
To cope with these immediate and long-term pressures, three
quarters of councils (75%) plan to increase their level of
borrowing. Over half of councils (57%) plan to use their reserves
with most of these councils (74%) also using their reserves last
year. Additionally, 90% of councils with social care
responsibilities intend to make use of the social care precept in
2020/21.
While there was some agreement (39%) that the Government
would prioritise immediate adult social care funding needs, the
sector was damning in its assessment of a long-term social care
strategy with 98% saying they were unhappy with progress so far
and 76% lacking confidence that the issue will be prioritised
moving forward.
Looking to the future, three quarters (77%) of councils
lack confidence in 100% Business Rate Retention as a mechanism to
fund local government. Alternative funding models which had
support include introducing a local share of income tax (46%),
having more freedom to levy other local taxes (40%), a local
share of the new digital tax (38%), tourist tax (36%) and a local
share of corporation tax (31%). Two thirds (66%) think that
councils will become more reliant on income from commercial
investments and commercialising council services remains a
popular income-generation option with two thirds of councils
(66%). Energy projects have moved up the list this year, with
almost half of councils (47%) considering this as a source of
income, compared with around a quarter (28%) in
2019/20.
Jonathan Carr-West, Chief Executive of LGiU,
said: “The state of local government finances is
dire. Eight years later and the message continues to be the same,
a broken record. It is simply unacceptable that the Government
has let things get to this point. Councils deserve better as they
work tirelessly, day in and day out, to deliver the best quality
services for their residents.
This isn’t local government asking for more money. 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. 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 can not wait
another year to be solved. That is why we look forward to working
with the new Government to develop solutions in the weeks and
months ahead.”
Heather Jameson, Editor of The MJ,
said: “The local government funding system is
in desperate need of an overhaul. Despite a decade of austerity,
local government is doing a valiant job of holding their services
together, but they can’t go on forever without proper
funding.
While the Government is reviewing the current funding
system, the reforms are unlikely to go far enough to pay for the
vital services that care for our elderly, protect our children,
and help our communities thrive.
As a country, we need to have a serious debate about the
state of our state. We need to consider what services we want and
how to pay for them. And we need to give local government the
powers to get on with the job.”
