Practically a 3rd of councils in poor areas contemplating chapter inside subsequent two years

At least 26 councils in a few of the poorest areas of the nation are contemplating declaring efficient chapter inside the subsequent two years, it has emerged.

A survey of 47 native authorities within the North, the Midlands and on the South Coast revealed a extreme pressure on funds pushed by the depletion of money reserves out there to cowl gaps in budgets.

Five members of the Special Interest Group of Municipal Authorities (Sigoma) stated they have been within the means of deciding whether or not to challenge a bit 114 discover of their lack of ability to stability their annual funds in 2023/24.

Another 9 stated they might should declare chapter subsequent yr.

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Sigoma stated it was the primary time many member councils have been contemplating issuing a bit 114 discover, which freezes all non-essential spending.

It stated it understands at the least 12 different councils throughout the nation at the moment are contemplating issuing a bit 114 discover in 2023/24.

Councils stated the most typical trigger of monetary pressures was demand for youngsters’s social care companies following requests from the federal government to deal with these companies as an equal precedence with grownup social care, and allocate further funding.

Other vital elements cited have been inflation prices and wage rises, with warnings an imminent improve in the price of borrowing is ready so as to add additional monetary strain.

The first S114 discover was issued by Hackney Council in 2000 and Northamptonshire County Council adopted swimsuit in 2018.

But since then councils have begun declaring chapter at an unprecedented fee, with S114 notices just lately issued by Conservative-run councils Thurrock and Woking and Labour-run Croydon and Slough.

Government ‘must recognise vital inflationary pressures’

Sir Stephen Houghton, Labour chief of Barnsley Council and Sigoma chair, stated: “The government needs to recognise the significant inflationary pressures that local authorities have had to deal with in the last 12 months.

“At the identical time as inflationary strain, councils are going through growing demand for companies, notably within the care sector.

“Pay increases are putting substantial pressure on budgets, and so the government must ensure that local authorities have the additional funding they need to fully fund these pay increases or risk impacting future service delivery.

“The funding system is totally damaged. Councils have labored miracles for the previous 13 years, however there’s nothing left.”

Councils ‘ultimately responsible’ for managing own finances

A government spokesperson said: “Councils are finally answerable for the administration of their very own funds.

“However, the government has been clear that local authorities should not take excessive risk with taxpayers’ money, and we have established the Office for Local Government to improve the accountability for performance across the sector.”