More than half of local councils in England are set to make cuts to services while raising council tax by the highest possible amount amid an “unsustainable” funding system.
A fifth of London councils say budget cuts will be evident to the public and almost 95 per cent will raise residents’ council tax bills, the Local Government Information Unit (LGIU) said in a new report.
The report said local authorities are facing “significant challenges” while confidence in local government finance is at an “all-time low”.
It comes amid growing pressure on Londoners after mayor Sadiq Khan confirmed plans to hike City Hall’s share of tax by almost 10 per cent, or an additional £38.55 on average bills.
The report, titled The State of Local Government Finance 2023, gathered responses from 138 councils, including 19 London boroughs.
Researchers found nationally more than half of councils will cut spending on services, increase commercial investments and spend reserves to make ends meet.
The report warned: “This is an unsustainable situation. Eventually, there will be no more cuts that councils can make without endangering their essential services.
“Our evidence suggests that for just under 10 per cent of councils, this is the situation they find themselves in now.”
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Experts pointed to a lack of funding from central government with council figures warning Whitehall had “comprehensively failed” to deliver a sustainable settlement package.
LGIU chief executive Jonathan Carr-West said this year’s survey results represented an “all-time low” in confidence in the funding system.
Councils, he said, were “let down by a funding system that is not fit for purpose” while the report “lays bare the depths of this failure”.
Carr-West urged the government to end the series of “disjointed one-year settlements” and deliver a multi-year funding agreement to local authorities.
He added: “Citizens across the country are failed in three ways: their bills rise, their services are cut and the councils they rely on edge ever closer to financial ruin. Local government is crying out for a toolbox of fiscal devolution measures.
“Give power to councils and let them succeed where central government has comprehensively failed.”
Key pressures for most councils were housing and homelessness services in the short term, while adult social care came in as the top long-term priority for finances.
James Jamieson, Local Government Association chairman, said councils were facing “significant challenges” due to “deep underlying and existing pressures”.
The Department for Levelling Up, Housing and Communities has been contacted for comment.