Ellie Ames 06 December 2023

One in five councils report bankruptcy fears

One in five councils report bankruptcy fears image
Image: EtiAmmos / Shutterstock.com

A new survey of council leaders and chief executives has revealed that almost one in five think it likely that their chief finance officer will need to issue a Section 114 notice this year or next.

The survey by the Local Government Association (LGA) also found that half of council leaders and chief executives are not confident that they will have enough funding to fulfil their legal duties next year.

Two thirds of respondents also said there were no announcements in the Autumn Statement that they thought would help them to manage their council’s financial position.

The LGA warned that English councils face a £4bn funding gap over the next two years ‘just to keep services standing still’.

A separate survey by the County Councils Network (CCN) found that nine in 10 councils are in a ‘significantly worse financial position’ following the Autumn Statement, in which chancellor Jeremy Hunt announced an increased National Living Wage but no new core funding for councils.

The CCN found that seven in 10 of its members are now unsure if they can balance their budget next year.

Its survey also found that half of county councils plan more service reductions following the Autumn Statement, including staff reductions and cuts to adult social care and school transport services.

Levellling up secretary Michael Gove has announced the local government finance policy statement, ensuring councils will receive a 3% minimum funding increase before council tax.

Responding to the policy statement, Cllr Elizabeth Dennis, District Councils' Network (DCN) finance spokesperson, said: ‘Even if councils go for the maximum council tax rises allowed, the small growth in our income comes nowhere near to keeping up with the inflationary and demand pressures that have accumulated over the past two years and will continue into the 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'.

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