Councils are collectively projecting unfunded budget pressures totalling £0.5bn for 2018-19, LGC research reveals. This is amid indications the sector will receive no more money in the spending review.
Four-fifths of top-tier councils are reporting they are on course to spend more than they had budgeted for this year, even once extra in-year savings have been factored in.
On average, each council needs to find an additional £3.7m on top of its previously planned savings.
LGC understands it is expected within the government that it will not provide any extra funding for councils in next year’s spending review.
Richard Watts (Lab), chair of the Local Government Association’s resources board, told LGC: “If the government fails to adequately fund local government there is a real risk to the future financial viability of some services and councils. Many local authorities will reach the point where they only have the funds to provide statutory responsibilities.”
LGC analysed the latest quarterly financial monitoring reports of 135 top-tier councils to find out how much they were projecting to overspend even once in-year mitigating measures, such as use of reserves, had been implemented.
Counties overall are predicting the biggest unmet overspend (£152m) followed by metropolitan councils (£123m). While London boroughs, like unitary councils, are collectively forecasting a combined £113m unmet overspend the capital’s councils have to find on average the second highest amount of extra savings (£4.6m).
Counties collectively are predicting the biggest unmet overspend, Northamptonshire CC accounts for more than a third of their total.
|Council||Projected overspend (£m)||Net budget (£m)||Overspend as % of budget|
|Kensington & Chelsea RBC||17.8||188||9.5|
A Northamptonshire CC spokesman said addressing the deficit “is daunting and is likely to be painful”. After previously agreeing its core service priorities, cabinet will next month consider a “stabilisation plan” which will “tackle our in-year budget challenge” and set out a strategic approach for future years, the spokesman said.
A County Councils Network spokesman said “the picture is undoubtedly bleak”. It estimates its members face a £3.2bn funding gap by 2020.
“With preventative services likely to be the victim of some of these cutbacks, and with a dwindling pot of money, it is hard to see how counties will avoid another year of significant overspends unless new government funding is forthcoming,” he said.
Geoff Winterbottom, principal research officer for the Special Interest Group of Municipal Authorities, said he “wouldn’t be surprised” if metropolitan areas “are in the vanguard of authorities with unresolved funding issues”.
He said officers might be “alerting” councillors to budget issues earlier as “I suspect a hard lesson has been learned about sitting on unpalatable financial decisions”.
Hover over the bars on the chart below for a full breakdown of the average unmet overspend for each council type
Five of the top 10 areas with the biggest unfunded pressures as a proportion of their 2018-19 net revenue budgets are London boroughs.
About £16m of Kensington & Chelsea RBC’s £17.8m black hole is largely driven by costs associated with Grenfell, which are out of the council’s direct control.
In 2017-18, many of the costs were met by the Ministry of Housing, Communities & Local Government but the borough is “unclear” if that arrangement will continue.
Kim Taylor-Smith (Con), Kensington & Chelsea’s deputy leader and lead member for Grenfell, said the council had set aside £5m but added: “We will be seeking further financial support from central government.”
A ministry spokesman said discussions are under way.
Shantanu Rajawat (Lab), Hounslow LBC’s cabinet member for finance and corporate services, said he was “acutely aware of our budget pressures”, largely driven by demand in children’s and adult social care.
A Lewisham LBC spokesman said the borough was “no exception” to “facing unprecedented budgetary pressures”, particularly in children’s social care.
London Councils said its boroughs face a collective shortfall of £2.1bn over the next four years.
“The financial position of councils is no longer sustainable,” a spokesman said.