Extra costs, resulting from a double whammy of changes, are forcing councils towards ‘crunch point,’ council chief executives have warned.

The new National Living Wage (NLW) and changes to pensions will, according to the latest figures, cost the sector more than £1bn a year.

The NLW will cost at least £337m in 2016/17, the Local Government Association (LGA) has said, and changes to pension arrangements will add a further £797m annually.

The Society of Local Authority Chief Executives (SOLACE) warned that the viability of the sector’s financial model was being called into question as a result of the extra costs.

SOLACE director Graeme McDonald said: ‘The new NLW adds a significant new burden to local government, particularly in social care.

‘This is one of a bulging list of risks that bring into question the viability of our finance model as councils face a rising tide of costs.

‘Increasing demand, new government burdens and a narrowing income base means the sector is approaching crunch point.’

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