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95% of councils in England could increase charges in April, while some will cut services
Local authorities in England are teetering on the edge of a financial crisis, with most planning to increase council tax from April while continuing to cut services, a survey has found.
The annual finance survey from the Local Government Information Unitthinktank (LGIU) comes days after Northamptonshire county council became the first town hall in two decades to declare effective bankruptcy. Severe financial pressures had left the council unable deliver a workable budget.
The LGIU warned that the Northamptonshire crisis was potentially the “tip of the iceberg”, with four-fifths of councils concerned about their financial sustainability amid uncertainty over funding and the accelerating costs of social care.
“Councils are on the edge. They are, for the most part, holding services together – although a significant minority are not. But they can only do this by raising council tax, increasing charging and draining their reserves,” said Jonathan Carr-West, chief executive of the LGIU.
Lord Porter, the Conservative chair of the Local Government Association (LGA), said the survey showed some councils were being pushed “perilously close to the financial edge”, adding that many more would face huge challenges in setting budgets for the coming year.
“Extra council-tax-raising powers will helpfully give some councils the option to raise some extra income, but will not bring in enough to completely ease the financial pressure they face,” he said. “This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.”
Local Tory MPs and Labour politicians have called for Northamptonshire to be taken over by government commissioners. The council forecasts a £21m overspend for the current year, and has warned that its finances will remain “grave” in the near future as it struggles to make £34m of cuts on top of the £376m made since 2010.
Earlier this week, ministers sought to head off a rebellion by backbench Tory MPs in shire areas by announcing an additional £150m of funding for adult social care in 2018-19, together with extra cash for rural areas. However, critics warned this was inadequate to meet long-term pressures.
The Ministry of Housing, Communities and Local Government said: “Our finance settlement strikes a balance between relieving growing pressure on local government while ensuring that hard-pressed taxpayers do not face excessive bills.
“We have listened to representations made from councils and delivered on these with extra funding. Overall, councils will see a real-term increase in resources over the next two years, more freedom and fairness, and with a greater certainty to plan and secure value for money.”
The problems facing local authorities are underlined by a National Audit Office (NAO) report that says England faces a recruitment crisis in social care, driven by poor wages and working conditions. It says current low rates of recruitment will not meet the estimated need for between 350,000 and 700,000 extra care workers by 2030.
Ministers have no up-to-date workforce strategy and have effectively ignored the growing crisis in social care staffing, the NAO report concludes. It says workforce planning is difficult while there remains little clarity about the sustainability of local authority spending on social care, which has fallen by 5.3% since 2010.
Brexit barriers on overseas workers could exacerbate the care worker shortage, the report suggests. There were 95,000 non-British European Economic Area nationals working in care in 2016-17, equivalent to 7% of the total workforce, although this rises to as much as 20% in parts of London and the south-east.
Meg Hillier, chair of the public accounts committee, said: “The NAO’s report shows the social care workforce is in a precarious state. We are increasingly dependent on care workers to look after ourselves and our families, yet the profession suffers from low pay, low esteem and high turnover of staff.”
The LGIU survey found spiralling demand for adult social care remained the greatest long-term pressure on council budgets, although a third of councils now say children’s social services funding is the biggest short-term challenge, fuelled by rising numbers of children being taken into care.
The thinktank said the vast majority of councils planned to make ends meet in 2018-19 by increasing council tax and drawing on “rainy day” financial reserves, as well as raising or introducing charges for services including parking, garden waste disposal, burial, planning, home care and meals on wheels.
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