'Worst yet to come' for local authorities as council bosses forced to make further cuts of almost £1bn

The “worst is still to come” for cash-strapped local authorities as they face further cuts of almost £1bn next year, council bosses have warned.

Residents in areas run by some of England’s largest councils will face another round of “unpalatable” cuts to services in 2019 as they are forced to make further savings to plug a £1.5bn shortfall by 2020.

In its response to a government consultation on funding for councils next year, the County Councils Network (CCN) warns its members will set out £685m in cuts next February to balance their budgets.

They said another £233m of “unplanned” frontline service cuts would be needed which have yet to be identified, unless government provides new funding next year.

This year, county authorities overspent £264m on children’s services in the face of unprecedented demand. With preventative services likely to be the victim of the £685m of cuts already planned, the CCN said an overspend of at least 10 per cent was likely to be repeated.

The CCN said that unless the government provided new funding, councils would have “no choice” but to outline almost £1bn of reductions in their budgets next February to ensure they can balance their books.

In these circumstances, authorities are likely to need to divert yet more resources to care services – increasing reductions to non-social care expenditure such as roads, libraries, economic growth services, and bus routes.

From April, the government’s “adult social care precept” will end for 13 county authorities, and ministers have chosen not to renew the Adult Social Care Grant, which has provided councils with last-minute funding over the past two years.

The CCN is now calling for an immediate injection of new resources, saying ending both these vital funding streams would have an “additional strain” on councils who are already under “intense financial pressure”.

Ministers will respond to the consultation later this winter. In the previous three years, minsters have needed to provide last-minute resources following lobbying from council leaders and rural MPs.

In a separate, subsequent survey, which asked county leaders what services they had to cut over the next three years (2018-19, 2019-20, and 2020-21), nearly half (45 per cent) said early years and youth clubs, 44 per cent said public health services and more than a third (36 per cent) said children’s services.

Cllr Nick Rushton, finance spokesman for CCN and leader of Leicestershire County Council, warned that county authorities were in a “serious and extremely challenging” financial position.

“The further planned funding cuts and continued escalation of costs outside of our control will make this bad situation even worse,” he said.

“I know from my experience in Leicestershire, that demand for services, cost inflation and government grant cuts will create £40m of financial pressures next year. Some of this can be mitigated by increasing council tax, but further savings will be necessary.”

Mr Rushton said the £1bn of savings next year would limit choices and make reductions to frontline services inevitable, saying valued services such as pothole and highway repairs, children’s centres, libraries and increased charges for residents all would all be “on the agenda”.

“There is not enough money today to run vital services. Next year there is even less from the drop in government funding, expiry of the social care grant and the ending of the social care precept for some councils. We will have to once again ask our residents to pay, but we are at the point where council tax rises alone are not going to protect services,” he added.

“The government needs to intervene if we are going to avoid unpalatable cutbacks next year. It is only with extra resource delivered on a sustained basis that will allow delivery of services that the public deserve, growth of our economies, and protection of the vulnerable and elderly.”

A government spokesman said: “Our funding settlement gave a real-terms increase in resources for local government in 2018-19.

“Local authorities are responsible for their own funding decisions, but over the next two years, we are providing councils with £90.7bn to help them meet the needs of their residents.

“We are giving them the power to retain the growth in business rates income and are working with local government to develop a funding system for the future based on the needs of different areas.”