Almost one in five council leaders and chief executives in
England think it is very or fairly likely that their chief
finance officer will need to issue a Section 114 notice this year
or next due to a lack of funding to keep key services running, a
survey by the Local Government Association reveals today.
The LGA estimates that councils in England face a £4 billion
funding gap over the next two years just to keep services
standing still but last month’s Autumn Statement failed to
provide the additional funding needed to protect services from
further cuts.
This is despite councils of all political colours and types
warning that growing demand and cost pressures are threatening
their financial sustainability.
In 2024/25, councils will be able to increase general council tax
by 3 per cent without the need for a referendum. Those with
social care responsibilities will again be able to increase the
adult social care precept by up to a further 2 per cent
again.
This means that councils continue to face the tough choice about
whether to increase council tax bills to bring in
desperately-needed funding to provide services when they are
acutely aware of the significant burden that could place on some
households.
The LGA survey – of council leaders and chief executives - also
reveals:
- Half are not confident they will have enough funding to
fulfil their legal duties next year (2024/25). This includes the
delivery of statutory services.
- Nearly two thirds of council leaders and chief executives
said there were no announcements in the Autumn Statement that
they thought would help them deal with their council’s financial
position.
The LGA said the circumstances that have led to a Section 114
notice so far have been unique to each local area and the
pressures they face.
However, all those that have had to curb spending in this way
have faced the same underlying pressures - councils’ core
spending power falling by 27 per cent in real terms from 2010/11
to 2023/24, the impact of the pandemic, rising demand for
services, in particular statutory services like social care and
homelessness support, and the extra costs to provide them.
The LGA said the Government urgently needs to use the forthcoming
provisional Local Government Finance Settlement to provide
councils with sufficient resources to set balanced budgets next
year without having to make drastic cuts to services.
Cllr , LGA Chair, said:
“The lack of funding for local services in the Autumn Statement
has left councils facing a growing financial crisis.
“No council is immune to the risk of running into financial
difficulty. As our worrying survey shows, many now face the
prospect of being unable to meet their legal duty to set a
balanced budget and having Section 114 reports issued.
“Local government is the fabric of our country, with councils
providing hundreds of services that our communities rely on every
single day. For many people, these services are a lifeline.
“If councils cannot thrive then our communities cannot thrive. If
social care services that councils provide cannot cope with
demand, then pressure on the NHS will grow further. If council
housing teams can’t succeed, then all of our hopes for new homes
will not succeed.
“While councils have worked hard to reduce costs, find
efficiencies and transform services, the easy savings have long
since gone. The Government urgently needs to act to address the
acute financial challenges faced by councils.”
Notes to editors
- An online survey was sent to all chief executives and leaders
in England on 23 November 2023. By 30 November, one third
(114) of council chief executives and over a fifth (71) of
council leaders had participated in the survey. To help ensure
that the findings were representative of all councils, their
responses were weighted by their role and council type.
- A section 114(3) report is issued by a council’s statutory
chief finance officer (section 151 officer) when it appears to
them that the council’s expenditure will exceed the resources it
has available in a financial year. Following the issuing of the
report all new agreements that incur expenditure are stopped for
a period of up to 21 days in which time the full council must
meet and respond to the report. The chief finance officer can
approve new agreements in this period but only if it prevents the
situation from getting worse, improves the situation, or prevents
the situation from recurring. Following the 21-day period the
chief finance officer can issue subsequent s114 reports if they
feel the council is not on a path to addressing its financial
issues.
-
The LGA’s Autumn
Statement 2023 On-the-day briefing summarised the key
announcements for councils.
