More than half of district councils do not expect to be able to balance their budgets in the next financial year as they face a funding shortfall of around £1.1bn by 2025.
A survey by the District Councils’ Network (DCN), published today (24 October), revealed that 52% of respondents do not expect to be able to balance their budget in 2024/25 without needing to draw on reserves, with a further 24% unsure. The network also predicted that authorities face a total budget deficit of £550m in 2023/24 and £610m in 2024/25.
The DCN stated that councils also anticipate making savings amounting to 9% of their budgets to ensure they can maintain services.
Elizabeth Dennis, DCN’s finance spokesperson, said: “Unless we receive a realistic financial settlement and the financial freedoms to ensure we can raise extra money to undertake our work, councils are left only with an impossible choice of which services to cut back.
“Any further scaling back of district council services would be disastrous.”
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The survey also revealed that 64% of respondents have needed to pause or significantly amend the timing or scope of capital projects, with 84% of councils indicating that they are likely to increase council tax next year by the maximum amount permitted.
Other pressures impacting councils’ budgets highlighted in the survey were pay and staffing, energy contracts and sales, fees and charges.
According to the DCN, the survey received 79 responses, which is 48% of all district councils.
The DCN stated that it is calling for an increase in district council spending power of at least 6%, through additional grant and freedom to raise money locally, the implementation of the government pledge to allow councils to increase planning fees to lessen the shortfall between them and the overall cost of providing planning services and additional support for homelessness and leisure services.
Dennis added: “We know public finances are tight, but it is essential that our spending power rises by at least 6% next year to avoid the worst cuts. We also urge extra support for the services hit by the highest rising demand, such as providing temporary accommodation where current funding lags far, far behind our actual costs.”
This comes as a recent analysis by the Local Government Association revealed that local authorities will face a funding gap of almost £4bn by 2025. This is due to a depletion of councils’ spending power and rising inflation, which is adding “unsustainable costs” onto councils’ budgets.
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