The leader of Hampshire County Council has called for “root and branch” changes to the way local government is funded as the authority faces a budget gap of £200m by 2025/26.
Cllr Rob Humby said the council was currently facing an “unprecedented financial situation” due to the increased cost of adult social care, growth in the use of services and rising inflation.
He said: “The financial pressures facing the county council by 2025/26 will be our toughest yet.
The entire system of local government finance is simply not fit for purpose, and urgent root and branch changes are needed to this funding model if the sector as a whole is going to survive this difficult period.
Unprecedented financial situation
“We are not alone in this unprecedented financial situation. This is a national problem as the entire system of local government finance is simply not fit for purpose, and urgent root and branch changes are needed to this funding model if the sector as a whole is going to survive this difficult period.”
Humby’s comments come as a report by Rob Carr, chief financial officer at Hampshire County Council, predicted a budget gap of between £180m to £200m in the council’s 2025/26 medium-term financial strategy.
The report highlighted that the council is currently struggling to balance its budget due to limited government funding and a reduced social care precept.
“The county council had previously been relying on a 2% per annum adult social care precept, but this was reduced to 1% over the life of the comprehensive spending review, reducing council tax income by around £28m per annum by 2025/26,” Carr said.
The report also estimated that the council will have already cut £640m out of its budget by 2023/24.
Unless something changes within this model, then there are no prospects for financial sustainability for the county council, a point that it has been making for many years now.
Budget imbalance
Carr said that without either increased government funding, changes to legislation to reduce service costs, a cut to public services or an increase in council tax the authority will struggle to balance its budget.
Alongside Humby, Carr called for a change the way local government is funded and said the council will engage with the government over the coming months to discuss the current financial uncertainty.
He said: “The entire system of local government finance is simply not fit for purpose as current local and national funding increases in [the financial] year are entirely insufficient to keep pace with the cost and growth increases that we experience.
“Unless something changes within this model, then there are no prospects for financial sustainability for the county council, a point that it has been making for many years now.”
The report will be presented and discussed at a cabinet meeting on 19 July.
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