Opinion: government increasing council budgets will help cash-strapped local authorities but cuts will still be necessary, writes political editor Paul Francis
12:34, 18 December 2023
It might not be a case of Christmas coming early.
But the government will hope that in the season of goodwill, its pledge to increase council budgets by 6.5% will at least stem the flow of local authorities declaring that they are close to bankruptcy.
The current cash crisis has plunged councils into turmoil and contemplating the kind of cuts that are unprecedented.
For the government, it has been a case of acting to ensure that in an election year, unwelcome headlines around Tory town halls cutting what are for some vital key services are avoided.
The question is whether they will. A 6.5% budget increase looks generous on paper but the harsh reality is that it won’t stop most councils from having to squeeze spending to balance their books.
And it is predicated on the expectation that councils will increase council tax by the maximum permitted - 5%.
Neither has the government responded to calls for the current system of funding to be examined more forensically and the case for changes to be properly considered.
Both Kent County Council and Medway Council are not among those authorities to have issued formal notices that they are bankrupt.
Both have indicated that they are facing some uncomfortable decisions despite the increase - largely as a result of demographic pressures that have fuelled rising demand for adult care services and support for vulnerable children.
These pressures have left councils exposed, with many using emergency reserves to meet the demand.
That is fine - it’s what the money is supposed to be for - but once spent, that’s it, it is gone and they have to be replenished, all from the public purse.
One-off handouts fail to offer councils the certainty they need and without that, long-term planning is challenging to say the least.
It is, however, reform that local government finance needs.
As Rishi Sunak has said, the government needs to take long-term decisions for a brighter future.
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