Mayors join calls for emergency cash to protect ‘on the brink’ councils

Labour regional mayors also said reforms were vital to ensuring councils can protect the vulnerable and boost growth.
Secretary of State for Levelling Up Michael Gove (Aaron Chown/PA)
PA Wire
Jonathan Bunn15 December 2023
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Regional mayors have warned the Government that councils on the brink of collapse need emergency funding to protect core services.

In a letter to Levelling Up Secretary Michael Gove, signatories including Mayor of Greater Manchester Andy Burnham and Tracy Brabin, Mayor of West Yorkshire, also called for a range of reforms to ensure sustainability across local government.

The six Labour mayors have joined a range of bodies in calling for a rethink of the local government finance settlement for next year.

They said the plan to make £64 billion available, which the Government says will mean councils on average receive an above-inflation rise in funding, will fail to cover rising costs and demand.

The letter said: “Councils across the country are seeing unprecedented increases in demand for services, the impact of inflation, and reductions in real terms funding levels equivalent to at least 25% since 2010.

“As a consequence, a number of authorities are facing real sustainability issues.

“You have indicated that the coming Local Government Finance Settlement (LGFS) will mirror the shape of last year. But we know that it needs to grow to keep up with significant demand pressures on local public services.”

The mayors said council services not only protect the most vulnerable in society but also “underpin” economic growth.

The letter highlighted children’s and adult social care as services that need particular attention as cost and demand increases exceed headline inflation.

Abolishing ringfencing, introducing multi-year grants and providing local authorities with the flexibility to be able to freely direct resources such as capital receipts, would help local authority financial planning

Letter signed by six regional mayors

The mayors also called for the Government’s fair funding review, which was launched in 2017 to look at adjusting distribution formulae to ensure councils’ resources better reflect local need, to be revived.

Rishi Sunak worked on the review when he was local government minister under Theresa May but it has since been abandoned.

However, the letter added “funding is not the only answer” and called for wider reforms.

It said: “Abolishing ringfencing, introducing multi-year grants and providing local authorities with the flexibility to be able to freely direct resources such as capital receipts, would help local authority financial planning.”

The letter was also signed by Liverpool City Region Mayor Steve Rotheram, South Yorkshire Mayor Oliver Coppard, Cambridgeshire and Peterborough Mayor Nik Johnson and North of Tyne Mayor Jamie Driscoll.

Ms Brabin, who led the intervention, said: “We as mayors have ambitious plans for our regions but we will never be able to deliver the full potential of devolution while our local authority partners are left on a financial cliff edge.

“We are seeing more demand than ever before for local public services and it is clear more urgent action must be taken.

“Councils across the country are struggling and we are urging the government to do the right thing and step in take action to support them before it’s too late.”

A total of seven councils have issued at least one section 114 notice declaring effective bankruptcy since 2020, three of which were issued this year.

Various organisations representing councils have warned more will follow soon if the Government does not provide further funding.

Confirmation of the LGFS is expected to be published on Tuesday.

Clive Betts, the Labour chair of the Levelling Up, Housing and Communities Committee, has written to Mr Gove to request further detail on the Government’s approach to the financial challenges facing councils.

During an appearance before the committee on December 7, Mr Gove blamed “poor leadership” for an increase in the number of councils that have declared effective bankruptcy.

Mr Betts said: “The Secretary of State confirmed the Department maintains a watchlist of local authorities that are facing significant financial pressures – he should now take the opportunity to set out his Department’s view of these challenges and whether these are one-off issues or systemic challenges.

“The Secretary of State should spell out what his Department is doing now to help councils plan for potential funding cuts and what assistance they are providing to ensure councils can deliver their services.”

A Department for Levelling Up, Housing and Communities spokesperson said: “We estimate that the upcoming Local Government Finance Settlement will make available approximately £64 billion to the sector, and expect that councils will see, on average, an above-inflation increase in the funding available to them next year.

“Councils are ultimately responsible for the management of their own finances, but we stand ready to talk to any council that is concerned about its financial position.”

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