England’s county and unitary authorities are ‘running out of road’ to prevent insolvency, with one in 10 not sure they can balance their budget this year.
A Society of County Treasurers survey of its 41 member councils, carried out with the County Councils Network (CCN), revealed a total funding gap of £1.6bn this year.
Shortfalls of £1.1bn and £1.3bn in 2024-25 and 2025-26 meant the councils were left facing a £4bn deficit over the next three years.
The local authorities plan to reduce the deficit by half with £2bn of ‘unprecedented’ further savings pencilled in over the three-year period, including £1bn this year.
This leaves them with a £639m overspend for 2023-24. The CCN said the majority of this was outside councils’ control, with half (£319m) attributable to children’s services.
CCN vice chair and finance spokesperson Barry Lewis said: ‘The number of vulnerable children requiring care has risen dramatically post-pandemic, while inflation and a broken provider market in statutory care placements mean councils face no choice but to pay spiralling fees.
‘County authorities will do all they can to bring down costs over the coming period and have pencilled in £2bn of unprecedented further savings to help balance the books.
‘But a decade of continuous cutbacks, the scale of reductions and use of reserves needed to fill the funding shortfall is simply unsustainable.’
