County councils in England are facing financial ruin, according to the County Councils Network. One in 10 English county councils are effectively bankrupt, endangering vital services, the council network has warned. The Birmingham City Council was forced to slash spending recently after it effectively declared bankruptcy. More councils fear that they could suffer the same fate. Many councils are now calling for emergency funding from the government to avoid financial collapse.
County councils are also struggling to balance their budgets due to high costs and increasing demand for their services, particularly adult social care, educational institutes, and highways. The County Councils Network states that local authorities are forecasting that they will overspend their budgets in 2023/24 by £639m this year. The demand on children’s social services, including care placements for vulnerable children and foster care, accounts for almost half of the projected overspend for this year.
To mitigate the issue, the councils have requested longer-term budget settlements to help with their financial planning. Some council leaders have stated that the situation is dire and that urgent action is needed. Stoke-on-Trent City Council has said that it could not sustain its services without a funding overhaul, while Coventry City Council has referred to the situation as “devastating.”
Finances for many councils are under additional pressure due to inflation increases, which are driving up costs. The government has already made £5.1bn available to local councils for 2022/23 and has stated that it is ready to engage with any council that is concerned about its financial position. The County Councils Network has called for additional resources to be provided urgently to fund vulnerable children’s services, as well as emergency funding for this year and the next
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