COUNCILS across England are lurching towards bankruptcy because of government cuts, two surveys found yesterday.
The risk of bankruptcy is escalating after Chancellor Jeremy Hunt’s Autumn Statement, which made no provision for local authorities to cope with rising inflation.
A survey by the Local Government Association (LGA) found that 20 per cent of council leaders and chief executives believe it likely that they will have to legally declare they cannot balance their books over the next year.
And half are not confident that they will have enough cash to meet their legal obligations, like social care and homeless support.
The chickens of austerity are coming home to roost in Tory areas, too.
A separate survey by the Conservative-run County Councils Network (CCN) found that nearly all their 36 authorities were in a “significantly worse” position after the Autumn Statement.
Seventy per cent now believe they will struggle to produce a balanced budget, up from 40 per cent before Mr Hunt’s measures.
Eighty per cent of the CCN authorities are now planning “painful” service cuts — even after maximum council tax rises.
The CCN councils have written to Levelling Up Secretary Michael Gove pleading for more cash; the LGA estimates that £4 billion extra is needed just to maintain current depleted service levels.
Putting their finger on the political problem for the Tories, the CCN letter said that service cuts and council tax rises were “a situation we would all want to avoid in a general election year.”
Labour LGA chairman Shaun Davies said: “Local government is the fabric of our country, with councils providing hundreds of services that our communities rely on every single day. For many people, these services are a lifeline.
“The government urgently needs to act to address the acute financial challenges faced by councils.”
Nine councils, including most recently Nottingham, have declared effective bankruptcy in the past few years.
Local Government Information Unit chief executive Jonathan Carr-West warned that 12 more councils could go bust by 2025
He said: “Councils are pulling every lever available to stay afloat: raising council tax, raising charges, cutting services, increasing commercial investments, spending finite reserves and selling assets — but it is simply not enough.”
Mr Gove claimed this week that the government was providing a real-terms increase in cash for councils, but then let the cat out of the bag by urging local authorities to “use their reserves to maintain services over this and the next financial year.”
