Councils face devastating service cuts as £5.8billion Tory black hole exposed

31 January 2024 , 17:48

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Many councils have been teetering on the brink of bankruptcy (Image: Graham Young / BirminghamLive)

Local councils face having to cut even more services as figures show they have lost a quarter of their funding in the past eight years.

Data from the House of Commons library reveals there will be a £5.8billion shortfall in the coming financial year when prices are adjusted for inflation. Every single council bar one, the Greater London Authority, is expected to experience a real-terms cut in funding.

Some 218 authorities, more than two-thirds, will experience a reduction of more than 30%. Hampshire Council saw the largest real-terms percentage cut in the latest funding settlement at 46.5%, a shortfall of £143.7million. This was followed by West Sussex (45.3%), Cheshire East (44.4%) and Central Bedfordshire (44.3%). Birmingham Council will suffer the greatest funding shortfall with the latest funding settlement leaving it £182.8m worse off.

The decline in funding across the country is equivalent to £194 per person. It comes as many councils have been teetering on the brink of bankruptcy under the weight of ballooning social care costs and inflationary pressures.

One example is Birmingham City Council, which declared itself “effectively bankrupt” in September. The local authority, which is the largest in Europe, is looking to cut 600 jobs in order to tackle its £300m funding gap over the next two years.

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The Liberal Democrats are calling for Local Authorities to have more powers and funding to deliver for their communities and to reform business rates to boost local economies.

Ed Davey, the party’s leader, said: “Youth services are being torn away from children, the elderly are not getting the care they deserve, and motorists have to put up with dangerous potholes all because this Conservative government has left a black hole in council finances.

“Instead of ensuring that councils have the resources they need, Rishi Sunak has turned a blind eye to disappearing breakfast clubs, tennis courts, and bus routes.

“The Conservatives have cut council finances to the bone and it is local people up and down the country who are paying the price. Without proper funding for local services, it is communities and local people who will continue to suffer.”

Will Forster, Deputy Leader of Woking Borough Council, which effectively declared itself bankrupt in June, said: “As a result of savage cuts from this Conservative Government and terrible mismanagement by the former local Conservative group, Woking Borough Council is having to make difficult choices.

“The buck stops with the Conservatives. If they continue to ignore, neglect and starve local councils and local people in places like Woking it will leave them with the crisis for generations to come. My message to the Government is clear: fund Councils fairly or ignore us and our residents at your peril.”

Sophie Huskisson