‘The country cannot deliver growth, reform public services or improve life chances without fixing local government finances’ according to the Local Government Association in its pre-Budget submission to the Chancellor
On the same day that Katherine Kerswell quit as Croydon Council CEO after five years which included additional borrowing amounting to a stonking £381million in capitalisation directions – or extra borrowing – her chums at the Local Government Association issued a pre-Budget warning that emergency government bail-out agreements for local authorities are at risk of becoming “normalised”.
It was the LGA which sponsored Kerswell’s initial interim appointment in Croydon back in 2020, as well as initially funding the salary of her assistant CEO, Elaine Jackson.
So the timing of the LGA’s now-annual appeal for a better settlement from central government for their members arrived at an opportune time. For the case for proper, fairer funding for local government, after 15 years of Tory-led austerity, is unarguable.
Whether the LGA’s biggest fans and beneficiaries, such as Kerswell, are capable of managing well the money they are given, however, remains open to debate.
The LGA says it has conducted “new analysis” (conducting an old one might be a bit pointless) ahead of Chancellor Rachel Reeves’ second Budget on November 26, and that they have discovered that “councils across England are at risk of substantial budget overspends in 2025-2026 across adult social care, children’s social care and homelessness services”. NSS*
In fact, in the three years from 2022, councils across England have overspent on housing the homeless by 52%. In this financial year, the LGA is predicting a 39% overspend on homelessness provision by local authorities.
“Councils are at the heart of every national priority from building homes and boosting inclusive growth to caring for children and supporting older and disabled people,” they said on Friday.
“It is therefore critical that government works with councils to reform key services, such as SEND and adult social care.”
There was a Kerswell-esque suggestion in the LGA’s announcement, in which they spoke of helping councils to “manage and reduce demand for acute services” – “managing demand” is councilspeak for eliminating it – and doing so through “the development of strong digital and technology foundations to drive productivity and efficiency”.
The LGA said: “The country cannot deliver growth, reform public services or improve life chances without fixing local government finances.”
The LGA found that from 2022 to 2025, despite increased levels of budgeted spend, councils overspent annually on average by 5.2% on adult social care; 14.2% on children’s social care; 25.1% on school transport for children with SEND; and 51.9% on homelessness.
“In 2025-2026, planned budgets again show steep rises – 9.0% for adult social care, 10.1% for children’s social care and a staggering 38.8% for homelessness.
“There is a clear potential for overspends in line with the previous three years in these services,” the LGA says. NSS*
“Overspending in these demand-led services means councils are increasingly being forced to rely on emergency measures such as in-year cuts to spend for other services and drawing on depleting reserves to balance their books. This is not financially sustainable.” Senior council officials, and the recently departed non-improvement improvement panel, have been saying that in Croydon since 2022.
The LGA said that 29 councils (including nearly one in six of all councils with social care duties) needed Exceptional Financial Support agreements this year to borrow, sell assets or increase Council Tax above the 4.99% cap simply to keep essential services running.
“This is a substantial increase on the number last year and a clear warning sign of systemic failure.”
The LGA said that capitalisation directions, as Croydon has received every year since 2019, “should be reviewed to ascertain whether they are achieving the objective of supporting councils in returning to financial sustainability”.
In its Budget submission, the LGA is calling for the Chancellor to:
- provide councils with a significant boost in resources to prevent widespread financial failure and empower councils to unleash growth and service reform at scale. It is good that government has proposed a range of local government financial reforms, including the guarantee of multi-year settlements and a move away from fragmented, ring-fenced grants and reducing reliance on competitive bidding. Greater financial certainty and a simpler funding system are important. However, all councils need adequate resources to meet growing cost and demand pressures.
- ensure the Government’s Fair Funding 2.0 reforms do not put the sustainability of individual councils’ finances and services further at risk by ensuring that robust transitional arrangements are put in place to protect councils from both cash-terms and real-terms cuts where necessary.
- address the £5billion SEND deficit, which continues to hang over local budgets. Writing it off, as part of the wider SEND reform programme, would give councils and schools the chance to focus on improving provision rather than firefighting finances.
Fair funding: LGA chair Louise Gittins
“When a system relies on emergency bailouts to function, it is fundamentally broken,” said Louise Gittens, a councillor from Cheshire who chairs the LGA.
“Councils have the legitimacy, local knowledge and ambition to make that happen. But they need a fair financial foundation to stand on.
“If the Government is serious about growth, public service reform and opportunity for all, it must start with councils – because when councils succeed, the country succeeds.”
And for the avoidance of all doubt, NSS means No Shit Sherlock.
Read more: Kerswell’s ‘Stabilisation Plan’ has failed before it is approved
Read more: IT’S OFFICIAL: Croydon still among country’s worst councils
Read more: Fresh shame for council in 4 ‘severe maladministration’ cases
Read more: Criticism of Kerswell’s election count ‘justified’ says report
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What the LGA say is absolutely right but it doesn’t go far enough. In the case of Croydon there needs to be a write-off of most of the £1.3 billion debt (not just the part that relates to SEND expenditure). The Government’s current bail-out policy just allows the Council each year to borrow more money to meet current demands. This simply increases the interest payable in future years and is unsustainable. Both Labour and Tory governments have failed on this issue, as has the hapless Mayor Perry.
At this point, David, everyone needs to accept that a debt write-off is never going to happen.
The Tory government refused to do it. This continuity austerity government won’t do it. Realistically, there’s a queue of perhaps 20 local authorities who would be demanding similar treatment. Woking is having a debt write-off simply so that the almagamation of county and district council and boroughs in Surrey can go ahead next year without burdening other councils with another authority’s debts.
In Croydon’s case, a debt rescheduling, with significant interest reductions, would save face for government while significantly reducing the repayments due – while stretching them out over many years to come.
That such a solution was never put forward by our imbecilic Mayor or his chief executive is among the myriad reasons Kerswell had to go.
I think with respect your aims are too modest IC. Debt rescheduling might give some relief, but ultimately it will just pass the problem on to future years. And it would probably need to be accompanied by severe further cuts to services if the books are to be balanced. This is the sort of “solution” the Commissioners in Croydon might come up with. Commissioners have done similar things in Birmingham, where massive cuts to bin workers’ pay have led to a strike which has already lasted 7 months.
You rightly identify austerity policies of the current Labour Government and previous Tory ones as the root of the problem (coupled with local mismanagement). But the answer is not to accept that but campaign for a change of government to one which rejects austerity.
When chunks of the banking sector went bankrupt due to bad debts in the financial collapse the State Nationalised them and created bad banks to take on the bad debts. Why not use the same principle with Local Government Finance and with Perry as the Leader it has an idea Bad Council to lump the debts into and he has given Croydon a flying headstart already.
With big businesses fleeing Croydon , fewer assets to flog off and the government unwilling to write off debts… i only see residents getting screwed with more council tax rises in one of the poorest boroughs of London. This isn’t gonna end well.
How can council services be run more productively? Throwing money around isn’t always the solution. We need to look at best practise around the world and get people in who can innovate. Also make council employees more accountable for incompetence and then people not up to the job will be more reluctant to take on the responsibilities of a public service position as will anyone wilfully mismanaging council funds.
Spare us the class war rhetoric Arfur – incompetence has been the hallmark of Labour and Croydon through the years, as documented by Inside Croydon. Accountability has been absent, so I think Moya’s suggestion is great. How the eff to bring it about is the problem.
LoLs. Still replying to the wrong thread. And who is “us”? You can barely speak for yourself, so don’t attempt to do so for other people
Do remember that >3000 people work directly for the council. The vast majority, social workers, librarians, housing officers, highways dept staff and everyone else do the best they can with what they’ve got despite the couple of dozen senior managers on £100,000 or more who are supposed to lead them.
Good point, Nick.
And to think there were more £150k pa positions at the council when Kerswell left than under Negrini…
Lions led by donkeys? It’s a popular idea that all the council’s managers are wallies and the rank and file dedidated heros, but I’m sure the ‘3,000’ include more than a few wasters. Just sayin …
Over half of the local councils in Great Britain are Labour-controlled. Only around one in six are run by Tories, mostly in posher areas. The Conservative government’s class war weapon of austerity has handed tax cuts to the rich while leaving Labour councillors to push through cuts that attack their own supporters and communities.
In Croydon Stuart King and his motley crew were so cowardly they sided with Perry to inflict even more damage on us and our town. In government, so-called Blue Labour is just rebranded Thatcherism, genetically modified by Morgan McSweeney and Maurice Glasman.
If Rowenna Davis succeeds in her ambition to replace Jason Perry, we won’t see anything different coming out of the town hall, apart from the substitution of short-sleeved shirts with red dresses