BBC investigation reveals local authority budgets face a £33m deficit by 2026
A BBC investigation has revealed the ‘black hole’ in local authority budgets continues to grow, prompting fears that some will not be able to provide basic services, such as adult care services.
Findings revealed that the average council now faces a £33 million predicted deficit by 2025-2026, a rise of 60 per cent from £20m two years ago.
Unison, one of the UK’s largest trade unions, representing staff who provide public services in the public and private sector, said the situation meant some councils would not be able to offer the “legal minimum of care” next year.
The UK Government said decisions on the funding beyond the next financial year had not yet been made.
The BBC’s Shared Data Unit surveyed 190 upper-tier authorities in the UK to find out the extent of the financial difficulties facing town halls, which provide services from adult social care to bin collections and pothole repairs.
It revealed council chiefs expect to be £5.2 billion short of balancing the books by April 2026 even after making £2.5 billion of planned cuts.
At least £467 million will be stripped from adult care services, which include elderly care homes, respite centres and support services for people with disabilities.
Recent analysis carried out by the County Councils Network (CCN) revealed that the quality and accessibility of adult social care could worsen as county areas has seen the elderly population grow significantly over the last decade.
This year, councils are closing leisure centres, reducing care packages and raising fees for services like waste collection and parking in order to break even.
Mike Short, Unison’s Head of Local Government, said town halls were in the “direst of states”. He said: “This is not a sustainable situation. Local authorities simply don’t have the funds to provide even statutory services.”
The investigation mirrors a survey from the County Councils Network and the Society of County Treasurers earlier this year, which found that 40 county and unitary councils could have to save over £1 billion in 2023/24.
Councillor Tim Oliver, Chairman of the CNN, responded to the BBC: “This research by the BBC continues to demonstrate the scale of the financial challenges facing local authorities in England.
“Our own research published in March this year showed that county and rural councils needed to make over £1 billion worth of savings to balance budgets in 2023/2024, even after four in five reluctantly levied the maximum council tax rise.
“Despite the government increasing funding for councils over recent years, a combination of high inflation and rising demand has left county and unitary authorities facing some of their most toughest budgetary decisions to date this year.
“County authorities will do all they can this year to deliver these savings whilst protecting vital frontline services, particularly care services, but there is now little fat to cut after a decade of financial restraint and many councils are facing significant in-year overspends as a result.
“We must remember that while inflation is beginning to reduce, these costs councils have incurred won’t just disappear from our budgets overnight – they are now embedded into the future.
“The medium-term outlook therefore looks bleak unless these higher costs are recognised and councils are given longer term financial certainty, alongside delivering long promised reforms.”
The investigation found on top of cuts, town hall chiefs are expected to use up £1.1 billion of reserves to balance the books this year.
Bradford Council said the authority was using reserves at an “unprecedented level” while Leicester City Council said it was going to run out during the next financial year.
Several councils have called for financial support from the government. Among them Slough, Croydon, Thurrock, Kensington and Chelsea, and newly created Cumberland and Westmorland and Furness councils will share around £393m in government funding this year.
Councillor Shaun Davies, who chairs the Local Government Association (LGA), said inflation, the introduction of the National Living Wage, energy costs and increasing demand for services were adding “billions of extra costs just to keep services standing still”.
From October 2023, flagship reforms to adult social care will be introduced, which will include a more generous means test, a cap on care costs of £86,000, a move towards a ‘fair’ cost of care, and the ability for people who arrange and fund their own care to ask their local authority to do it on their behalf.
