Local authorities in England are set to see their funding increase by 6.5% as the Government attempts to prevent more councils from declaring effective bankruptcy.

Communities secretary Michael Gove has announced a £64bn support package today after repeated warnings that local authorities across the country are facing severe financial difficulties.

Local authority leaders have criticised the settlement, describing it as 'unthinkable'.

Local authorities up and down the country, including Birmingham, Nottingham, and Woking, have been forced to issue Section 114 notices, effectively declaring bankruptcy.

A recent survey of councils by the Local Government Association (LGA) found that almost one in five think it likely that they will need to issue a Section 114 notice this year or next.

The Special Interest Group of Metropolitan Authorities (SIGOMA) has also warned the Prime Minister that the new year could see a ‘surge’ of section 114 notices being issued.

Minister for Local Government Simon Hoare said: 'It is good news for our local government sector that we are presenting an above-inflation increase in funding.

'We are, and will, continue to work alongside councils to ensure quality and reliable services are provided to those who need and use them, while also keeping a weather eye on ensuring value for the taxpayer.'

Cllr Shaun Davies, chair of the Local Government Association (LGA), said: 'Today’s settlement does not provide enough funding to meet the severe cost and demand pressures which have left councils of all political colours and types warning of the serious challenges they face to set balanced budgets next year. Councils in England continue to face a funding gap of £4bn over the next two years as today’s announcement does not change the funding gap facing councils this year and next.

'It is therefore unthinkable that government has not provided desperately needed new funding for local services in 2024/25. Although councils are working hard to reduce costs where possible, this means the local services our communities rely on every day are now exposed to further cuts.'

The County Councils Network (CCN) said that county authorities will be ‘bitterly disappointed’ by the announcement.

'The County Councils Network (CCN) had put together a strong case for emergency funding next year to address the significant financial headwinds councils face which are outside of our control. But despite constructive discussions with ministers over recent days the government has chosen not to act,' said Cllr Barry Lewis, Finance Spokesperson and Vice-Chairman of the CCN.

'With no additional funding announced, our councils will have no choice but to implement more severe reductions to services and to levy higher council tax rises. This will undoubtedly be a double whammy for residents during a cost of living crisis, while an increasing number of local authorities will struggle to deliver a balanced budget next year.'

If this article was of interest, then check out, 'Can local government take much more?', 'Preventing future Section 114 notices' and 'How to fix local government finance'.