More than half of councils in the north of England are at risk of ‘financial failure’ within the next five years, analysis has found.
Financial adviser Grant Thornton found 40% of councils face their reserves falling below 5% of their net revenue expenditure – described by the firm as ‘financial failure’ – within the next five years, rising to 55% of councils in the North.
In the next year alone, 30% of northern councils are at risk of financial failure, almost twice the number of councils at risk in London (15%) and the South (17%).
Grant Thornton said deprivation, lower levels of reserves and lower economic output are exacerbating local government funding issues for northern councils.
The North also has a higher number of metropolitan boroughs and unitary authorities, which are five times more likely to be at risk than county councils, which are predominantly in the South, the firm said.
Grant Thornton’s head of public sector consulting, Phillip Woolley, said: ‘While our analysis shows that councils in the North are more likely to become “at risk” of financial failure more quickly, the financial vulnerability of councils is a sector-wide issue.’
