Fury as Michael Gove snubs emergency council cash plea amid bankruptcy fears

18 December 2023 , 17:25

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Michael Gove has been criticised after next year's council funding was announced (Image: Getty Images)

Councils struggling to balance their books face more misery next year after ministers ignored demands for emergency funding.

Leaders warn they will have to make even more severe cuts or ramp up council tax after the latest Tory cash snub. The Government has announced £64billion of funding for English councils in the next financial year - a 6.5% rise.

But local authority bosses say this is not enough, with seven in ten no longer confident they can balance their books. Last month Nottingham City Council became the eighth to effectively declare itself bankrupt since 2018, with fears of more to follow.

Following the announcement the County Councils Network (CCN) warned voters are now left facing a "double whammy". The body's finance spokesman, Cllr Barry Lewis, said it had put a "strong case" for emergency funding due to financial pressure beyond out councils' control.

He said: "But despite constructive discussions with ministers over recent days the government has chosen not to act. With no additional funding announced, our councils will have no choice but to implement more severe reductions to services and to levy higher council tax rises.

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"This will undoubtedly be a double whammy for residents during a cost of living crisis, while an increasing number of local authorities will struggle to deliver a balanced budget next year."

Labour has lashed out at the Government, accusing it of having a "reckless approach" to local government funding. Shadow local government minister Jim McMahon said: “Today’s announcement is a prime example of sticking plaster politics.

"Councils of all stripes continue to face financial difficulty, and the common denominator is a Conservative Government. The government’s reckless approach to local government risks preventing older people from getting the care they deserve, risks children not getting the protection they need, and risks families being left without a safe and secure home."

He said councils are struggling due to high inflation and a stagnating economy, adding: "This is a crisis made in Downing Street being felt by every street in the country."

Meanwhile the Local Government Information Unit (LGIU) said too little had been done to address long-term funding. Chief executive Jonathan Carr-West said: “This year’s provisional financial settlement does not address the severe problems at the heart of local government finance and is simply too little, too late. There is little confidence across the sector in local governments’ financial resilience. In March this year, only 14% of senior council figures said they were confident in the sustainability of local government finances. Since then, three more councils have announced their effective bankruptcy."

In a statement the Government said an extra £4billion was being awarded "in recognition of the pressures being faced by local authorities". Local authority bosses are allowed to raise council tax by up to 3% without a local referendum - with an additional 2% for those responsible for adult social care.

Levelling Up Secretary Michael Gove said: “Councils are the backbone of their communities and carry out tremendous work every day in delivering vital services to the people they serve. We recognise they are facing challenges and that is why we have announced a £64 billion funding package to ensure they can continue making a difference, including through our combined efforts to level up.”

The Government said England's most deprived areas will receive 18% more per dwelling than the wealthiest areas, while an extra £1billion will be allocated for social care.

Dave Burke