Laura Sharman 06 October 2022

One in six councils at risk of running out of money next year

One in six councils at risk of running out of money next year image
Image: Lance Bellers / Shutterstock.com

One in six councils in England could run out of money as early as next year without further budget cuts or additional income, new research has warned today.

Research from Grant Thornton shows English councils face a £7.3bn financial black hole by 2025/26. This is an increase of £4.6bn since the beginning of the year, according to the data.

It warns that without additional income, councils will be forced to make savings of over £125 per head of population by 2025/26.

Phillip Woolley, head of public services consulting at Grant Thornton UK LLP, said: ‘Our research shows, the additional Covid-19 funding - while critical to support immediate challenges - has not addressed underlying systemic issues or the precariousness of councils’ financial sustainability in the face of economic instability.

’Local authorities are also now facing the risk of interest rate rises increasing debt financing costs and the real risk of reduced funding from central government, in response to the current economic turmoil facing the country.’

This week it was revealed Kent CC faces a budget gap of more than £50m by June – enough to wipe out 50% of its total reserves if not reduced.

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