Councils in England are “running out of road” when it comes to their finances, with almost half saying they do not know if they can balance their budgets next year.
The County Councils Network (CCN) said 41 county and unitary authorities in England are staring down a budget gap of £4bn over the next three years, and will be unable to stave it off on cuts alone.
Barry Lewis, the CCN’s vice-chair, said the scale of the cuts needed to fill the gap is “simply unsustainable” after “a decade of continuous cutbacks”.
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This year, councils predict a total budget deficit of £603m, despite making cuts of more than £1bn, with around 10% reporting they are unsure if they can balance their books.
That figure rises to four in 10 for next year, with councils expected to overspend by more than £600m, with the proportion increasing again to six in 10 by 2025/26.
It comes after a number of councils, including Birmingham, Woking, Northumberland and Slough, issued Section 114 notices – which effectively declares bankruptcy.
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Mr Lewis added the rising cost of children’s social care was the main cause of the budget problems, accounting for around 50% of the forecasted overspend, and called for more help from the chancellor in his Autumn Statement this month.
He said: “The number of vulnerable children requiring care has risen dramatically post-pandemic, while inflation and a broken provider market in statutory care placements mean councils face no choice but to pay spiralling fees.”
Mr Lewis added: “Last year the chancellor stepped in with much-needed additional resources for adult social care. We now need the same priority to be given to vulnerable children, providing emergency funding this year and next.”
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The councils involved in the CCN report cover 26.9 million people, roughly 48% of the population, with a number of them already expressing concern over finances.
In September, Derbyshire County Council said it expected to overspend by £46m, and agreed to introduce cuts to prevent it.
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Shropshire said it was facing a £37.6m overspend, while Suffolk reported £22m and Hertfordshire £16.4m.
Overall, cuts worth £2bn are expected to be made over the next three years, but a gap of just under the same amount is still predicted.
Mr Lewis said: “Birmingham’s recent financial difficulties and issuing of a Section 114 were undoubtedly made worse by the council’s performance and governance.
“But, unless we act now, this analysis shows that other well-managed councils are running out of road to prevent insolvency.”
