Billions needed to plug council funding gap

Councils will need billions in extra funding to address growing funding gaps, a new independent report finds.

Commissioned by the LGA, the Institute for Fiscal Studies (IFS) independently reviewed the future funding outlook for councils, including ‘business as usual’ pressures, cost impacts of the pandemic, and the potential long-term impact of economic changes on local income such as local taxes, sales, fees and charges. 

Taking the pressures estimated by the IFS together, councils face an estimated funding gap of £5.3 billion by 2023/24 which could rise to £9.8 billion due to continuing uncertainty around COVID-19. 

As first was going to press, the Budget had been delayed and there was speculation that the Government’s planned Spending Review may now cover just the next financial year. However, the LGA’s submission urges the Government to commit to a three-year local government finance settlement and sets out the additional funding councils need to sustain services at 2019/20 levels, address growing cost pressures and improve the services they can provide to their communities. 

Cllr Richard Watts, Chair of the LGA’s Resources Board, said: “The IFS report will support our firm case to government that councils need certainty over their medium-term finances and adequate funding to tackle day-to-day pressures and the lasting impact of COVID-19 on income and costs. 

“In the coming weeks and months we will be setting out how, with the right funding and freedoms, councils can provide local services which communities rely on and grasp the opportunity to address the stark inequalities the COVID-19 pandemic has exposed, develop a green recovery, address skills gaps and rebuild the economy so that it benefits everyone.”

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