Councils plead with next government to fix 'broken' system or risk more town halls going bust

The next government has been urged to commit to a “significant and sustained” funding boost to stop more local councils going bust and protect essential frontline services.

Leaders in the North East have backed calls from the Local Government Association (LGA) pleading with all political parties to act on a predicted £6.2 billion financial black hole facing town halls across England. In a new white paper published today, the LGA pleads with whoever wins the general election on July 4 to launch an urgent review into public service reform and deliver far greater certainty that prevents cash-strapped local authorities making further cuts to services like leisure centres, bin collections, and road repairs.

A number of councils, including Birmingham, has been forced to effectively declare bankruptcy already after reductions in government funding, spiralling demand for services like adult social care, and increasing costs. The leader of Gateshead Council, Martin Gannon, warned that the existing funding model for councils is “completely broken”.

His authority has cut its spending by £191 million since 2010 and faces a further £50 million shortfall over the next five years, which has sparked controversial decisions such as the closure of leisure centres and uncertainty over the future of Gateshead International Stadium. Coun Gannon said: “There are local authorities across the country of all different political persuasions that are effectively going bankrupt.

“It has been obvious for some time that the current model of funding local government is completely broken. It is dysfunctional and it does not work. And if something new and radical does not happen we will face a situation where the vast majority of local authorities will, within the next parliament, face similar problems.”

The LGA said it wanted the next government to commit to a “significant and sustained increase in funding”, alongside multi-year rather than 12-month financial settlements for councils and plans to reform the local government finance system. It warned that a failure from incoming ministers to act would leave more councils “unable to deliver their legal duties for their residents and putting vital services at further risk of cutbacks”.

Further proposals include giving councils greater power to build houses and reforms to ensure that adult and child care services are properly funded.

Northumberland County Council headquarters at County Hall, Morpeth
Northumberland County Council headquarters at County Hall, Morpeth -Credit:Newcastle Chronicle

Northumberland Conservative party chair and deputy council leader Richard Wearmouth said: “In Northumberland we have managed our finances well. As a result unlike Labour run North East councils we have been able to maintain good services, investing in projects like new leisure centres whilst places like Gateshead are closing theirs. We ask any incoming government to pursue a multi year budget settlement with councils. That will help us to plan our finances in a prudent and informed fashion.

"We urge the next government, regardless of its politics, continues the current government’s programme of levelling up. This Conservative government has invested hundreds of millions into Northumberland on projects like the Northumberland Line and that progress must be maintained and built upon if we are to thrive.”

Liberal Democrat Amanda Hopgood, who leads Durham County Council’s coalition administration, echoed the call for longer-term funding and said there are other measures a new government could take to help – such as imposing regulations to control fees charged to local councils by care providers running children’s homes and providing help with the spiralling cost of home to school transport.

She told the Local Democracy Reporting Service: “I am not naïve enough to think that a government will come in and find lots of money, because there is not lots of money. But they need to think differently in how they can support our budgets by giving us longer settlements and regulating things to make them fairer for us.”