Local authorities face a funding gap of almost £3bn over the next two years just to maintain services at their current levels, a new analysis by the Local Government Association (LGA) has warned.
According to the LGA’s research, the costs to councils of delivering their services will exceed their core funding by £2bn this year and £900m in 2024/25.
The LGA, which begins its Annual Conference in Bournemouth today (4 July), also stated that if inflation falls in line with the Bank of England’s recent projections, councils will face an extra £740m in cost pressures this year and an additional £1.5bn in 2024/25.
The national membership body for local authorities highlighted that this figure covers just the funding needed to maintain services at their current levels and does not address existing underfunding in areas such as the adult social care provider market and children’s social care.
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Pete Marland, chair of the LGA’s Resources Board, said: “Inflation, the National Living Wage, energy costs and ongoing increasing demand for services are all adding billions of extra costs onto councils just to keep services standing still.
“Councils’ ability to mitigate these stark pressures are being continuously hampered by one-year funding settlements, one-off funding pots and uncertainty due to repeated delays to funding reforms.”
The LGA stated that despite the government confirming some funding streams for councils over the next two years, significant uncertainties remain in the level of funding local authorities will receive in 2024/25, which is “hampering financial planning and their financial sustainability”.
Marland added: “The government needs to come up with a long-term plan to sufficiently fund local services. This must include greater funding certainty for councils through multi-year settlements and more clarity on financial reform so they can plan effectively, balance competing pressures across different service areas and maximise the impact of their spending.”
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