Chris Mahony 27 June 2022

Council chiefs warn of 'disastrous' financial crisis

Council chiefs warn of disastrous financial crisis  image
Image: JMiks/

More councils could be tipped into financial crisis while others face emergency in-year cuts due to soaring inflation and living wage increases, the Local Government Association (LGA) warned today.

Analysis published as the association launched its annual conference in Harrogate predicted additional cost pressures of £2.4bn this year, rising to £3.6bn in 2024-25.

LGA chairman James Jamieson said: ‘Soaring inflation, energy prices and National Living Wage (NLW) 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.’

The LGA analysis said both inflation and energy prices have continued to spiral upwards since ministers announced the local government finance settlement and councils agreed their budgets in March – prompting an ‘unprecedented crisis’.

Finance spokesperson for the County Councils’ Network, Carl Les, said: ‘Without funding to offset this crisis, councils could have to scale back construction projects or make in-year reductions to services.’

Last week the LGA warned that Government pledges on the NLW could cost councils at least £400m over the next two years and this week it laid out how proposed social care reforms had been underfunded.

Chairman of the LGA’s community wellbeing board, David Fothergill, said: ‘Underfunding these reforms will only exacerbate pre-existing significant pressures, which the reforms – and the funding for them – do nothing to address.’

A spokesperson for the Department for Levelling Up, Housing and Communities said: ‘We are working with the sector to understand the impact of emerging challenges on councils and stand ready to speak to any council that has concerns about its ability to balance its budgets.’

For your free daily news bulletin
Highways jobs

Early Years Entitlement and Sufficiency Officer

City of York Council
Grade 7 Level 1 - 4 (£29,230 to £31,391 per annum) reduced pro-rata
Are you experienced in Early Years Education Funding and looking for a new challenge? York, North Yorkshire
Recuriter: City of York Council

Administration Apprentice

Essex County Council
Up to £12348 per annum
Administration ApprenticeFixed Term, Full Time£12,348 per annum rising to £22,072 per annum on the second yearLocation
Recuriter: Essex County Council

Head of Finance (Deputy S151 Officer)

Babergh & Mid Suffolk
£60,757 - £73,775 (plus national pay award)
Together we are building a more resilient, sustainable future. Suffolk
Recuriter: Babergh & Mid Suffolk

Community Care Business Unit Assistant

Sandwell Metropolitan Borough Council
Band D, SCP 9 -17 (£25,119 - £28,770 per annum)
An opportunity has become available for four Community Care Business Unit Assistants, based in Finance. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Social Worker

London Borough of Richmond upon Thames and London Borough of Wandsworth
£36,426 - £49,503 per annum

Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Linkedin Banner

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.