Councils are expected to spend an estimated £139bn on the delivery of public services this year, says a report.

A report published yesterday by the Housing, Communities and Local Government (HCLG) Committee, titled ‘The Funding and Sustainability of Local Government Finance’, reveals an increase of roughly £9bn in council spending on mandatory services between 2023/24 and 2025/26.

The report highlights the ‘broken link’ between increased council tax and declining service quality, resulting in a ‘growing dissatisfaction among residents and a danger to the democratic process in this country'.

Among the ‘big pressures’ faced by local authorities, the committee identified the service areas of adult social care, special educational needs and disabilities (SEND), and temporary accommodation as those requiring urgent reforms.

As part of its recommendations, the report emphasises the importance of reducing demand for more costly acute services by focusing on prevention, as well as urging the Government to prioritise council tax reforms.

Florence Eshalomi, Chair of the HCLG Committee said: ‘In the long-term, HM Treasury should devolve tax-setting powers to local authorities, allowing them to set their own local taxes, such as tourist levies.

‘If, as a country, we are going to deliver growth and improve local services, Westminster needs to ease its grip and let councils have more power to control their own affairs and be accountable to their own electorates.’

Cllr Pete Marland, Chair of the Local Government Association’s Economy and Resources Board, said that ‘all councils remain under pressure and face having to increase council tax bills to try and protect services at the same time as making further cutbacks.’

‘A sustainable, long-term financial model for local government must lead to all councils having adequate resources to meet growing cost and demand pressures’, he added.

Cllr Claire Holland, Chair of London Councils commented: ‘It’s right that the government is targeting deprivation in the new formula, but we are concerned that the measures used in the current proposals will not sufficiently account for London’s extreme housing poverty.

‘We will continue to raise these and other issues with government and we welcome the opportunity to work with them to ensure the new funding system is fair, robust and distributes funding efficiently’, she added.