Rising inflation, energy prices and National Living Wage pressures are set to add £3.6bn of extra costs onto council budgets in 2024/25, according to an analysis by the Local Government Association (LGA).
As its annual conference in Harrogate starts today, the LGA warned that the extra cost pressures pose “a serious risk” to the future financial viability of some services and councils.
Cllr James Jamieson, LGA chairman, said: “As our analysis shows, the impact on our local services could be disastrous. This will stifle our economic recovery, entrench disadvantage, and undermine government ambitions to level up the country.”
The unforeseen cost pressures by both central and local government will add £2.4bn to council budgets this year, which will rise to £3.6bn in 2024/25.
The LGA reported that the “unprecedented crisis” is forcing councils to rip up financial plans set three months ago. Some authorities have said that in light of the current situation, cuts to local services may be necessary to balance their books.
Jamieson added: “Budgets are having to be reset with potential cuts to the essential services people rely on, in the middle of a cost-of-living crisis.”
The LGA has called for government support to ensure that councils have the resources to overcome unprecedented costs and protect services that communities rely on.
“Only with adequate long-term funding – to cover increased cost pressures and invest in local services – and the right powers, can councils deliver for our communities, tackle the climate emergency, and level up all parts of the country,” Jamieson said.
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