Coventry City Council says it is facing the prospect of having to issue a section 114 notice and has written to central government asking for assistance.
The letter to Michael Gove asks for short-term help from the Department for Levelling Up, Housing and Communities (DLUHC) and urges the secretary of state to visit Coventry so the council can explain its situation “more fully”.
The letter is jointly written by George Duggins, leader of the council, and Richard Brown, cabinet member for strategic finance & resources. In it, they say that a section 114 notice has become a real possibility “because shortages in government funding mean we can no longer keep pace with demand”.
As reported, these concerns were raised in a recently published report which will be presented to the council’s cabinet next week (29 August).
Duggins and Brown wrote that they believed the underlying financial situation in local government – which they said “stands on the precipice of financial disaster” – could “only be mitigated by long-term funding reform”. But in the short-term they called on DLUHC to assist, saying they would welcome a discussion on potential measures to help.
Such measures could include “an income mitigation fund, top ups for under-funded authorities, or fairer funding in relation to social care and housing”, the pair said.
In urging Gove to visit Coventry, Duggins and Brown said they would be able to “explain our situation more fully and elaborate on the catastrophic impact that our funding shortage will have on services for some of our most vulnerable residents”.
The letter to the secretary of state aims to draw Gove’s “attention to the devastating impact the dire financial situation facing local authorities across England will have on a well-run authority like Coventry City Council”.
Despite “many years of robust financial management”, where difficult decisions to manage within budget have been taken, Coventry said it was “facing unprecedented times”.
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The letter stated: “Since 2010, we have received £120m less each year – equivalent to real terms cut in core spending power of £678 per household between 2010-11 and 2023-24. This is a much bigger cut than the England average of £581.
“Previous analysis has indicated that Coventry was amongst the 30 worst funded local authorities in the country in terms of core spending power, reflecting inaccuracies in data on which local authority grant allocations are based. Similarly, the most recent national data available (2019) shows that Coventry is just outside the most deprived quartile of local authorities in the country (81st out of 317 local authorities).
“This year, and despite significant management actions to reduce spend, Coventry City Council still faces in-year pressures of c£12m, rising to a deficit of over £30m for the next financial year. This primarily reflects increased demand for adult and children’s social care, demand for housing, and wider inflationary pressures.
“Unfortunately, the proposed one-off funding guarantee to ensure at least a 3% increase in core spending power is nowhere near sufficient to meet inflationary pressures and cope with the rise in social care costs. The escalating costs of placements – for children and adults – reflect a market that is broken, where local authorities are forced to cut other budgets to respond to this statutory demand. This position presents a clear and present danger to the ability of councils like Coventry to deliver their core functions.”
The letter also cites a recent report by the Institute of Fiscal Studies, which highlighted mismatches in local government funding. “Coventry is flagged as an area that has been significantly underfunded across multiple public services,” the letter stated. “Comparing funding in the report for Coventry City Council with the assessed relative need, shows a shortfall of circa £50m.
“We have always responded with prudent investments, robust management, innovation in service delivery – maintaining a balanced position in recent years. However, like others in the sector, we are now facing the prospect of having to issue a section 114 because shortages in government funding mean we can no longer keep pace with demand.”
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