Local government leaders in England have expressed concern that more councils risk going bankrupt following the UK government’s tax and spending plans. A lack of funding outlined in the Autumn Statement had left many councils facing a real risk of bankruptcy. Large councils leaders, including 26 Conservatives, have written to the government warning of painful cuts to front-line services.
Two groups, the Local Government Association (LGA) and the County Councils Network (CCN), which represent councils in England, found in snap surveys that almost one in five members faced a risk of running out of funds either this year or next. The LGA described the findings as “worrying”, and said the results painted a picture of a “growing financial crisis”.
Nottingham City Council was the latest council to issue a Section 114 notice, which means halting spending on anything that is not legally required. Local government leaders have warned that other councils could soon follow suit. The LGA’s chairman, Shaun Davies, said “no council is immune to the risk of running into financial difficulty,” and urged the government to “act to address acute financial challenges faced by councils.”
While the UK government has increased funding available to councils, including for this year and next, a combination of inflation and growing demand for services, particularly support for vulnerable adults and children and housing services, has left many councils facing budgetary shortfalls. The Department for Levelling Up, Housing and Communities said it had made £5.1bn of funding available to local authorities in the last financial year
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