Rising energy prices and spiralling inflation are
forcing councils to rip up financial plans set just three
months ago with the potential of emergency funding cuts to local
services to meet their legal duty to balance the books this
year.
As more than 1,600 local government leaders, councillors and
ministers gather at the start of its Annual Conference in
Harrogate today, new analysis published by the LGA
reveals soaring inflation levels will add £800 million of
extra cost pressures onto council budgets this year alone.
Taken together, inflation, energy costs and projected increases
to the National Living Wage will add £2.4 billion in extra cost
pressures onto council budgets this year alone, rising to £3.6
billion in 2024/25.
The LGA said the sharp spike in inflation and energy prices
is an unprecedented crisis which could not have been predicted by
either central or local government when the Government finalised
the local government finance settlement earlier this year and
councils set their budgets in March.
These extra cost pressures pose a serious risk to the
future financial viability of some services and councils.
It has left councils facing a perfect storm from demand for
services continuing to rise just as the price of providing them
is also escalating dramatically. This is undermining council
efforts to help level up communities and support residents
through the cost-of-living crisis.
The LGA said the Government needs to ensure councils have the
resources they need to meet these unpredicted costs and protect
the services that are helping communities recover from the
pandemic and residents cope through the cost-of-living crisis.
Cllr James Jamieson, LGA Chairman, said:
“Soaring inflation, energy prices and National Living
Wage pressures are putting council services at risk. Budgets
are having to be reset with potential cuts to the essential
services people rely on, in the middle of a cost-of-living
crisis.
“Inflation is not going to come down overnight. As our analysis
shows, the impact on our local services could be disastrous.
This will stifle our economic recovery, entrench disadvantage,
and undermine government ambitions to level up the country.
“Local government remains the fabric of our country, as has been
proved during the hugely challenging few years we have faced as a
nation. Only with adequate long term funding – to cover
increased cost pressures and invest in local services - and
the right powers, can councils deliver for our communities,
tackle the climate emergency, and level up all parts of the
country.”
Notes to editors
- The Local Government Association will host its in-person
annual conference between June 28-30 in Harrogate.
Speakers will include Levelling Up
Secretary , Education
Secretary , Shadow Levelling
Up Secretary , Liberal Democrat
leader Sir and crossbench
peer Baroness Lola Young.
