‘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”.
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.
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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