Councils will have no choice but to implement significant cuts to services unless the Government provides extra funding to meet demand and cost pressures, the LGA has warned.
It has calculated that councils face extra cost pressures this year of £2.4 billion because of rising inflation, increases in the National Living Wage and higher energy costs – increasing to estimated funding gaps of £3.4 billion in 2023/24 and £4.5 billion the year after.
The LGA is calling for a long-term government plan to manage the crisis in councils’ finances and has warned against cutting their funding.
Government departments have been asked to find ‘efficiency savings’, amid ongoing political, economic and financial uncertainty and, the replacement of Kwasi Kwarteng as Chancellor by former Health and Social Care Secretary Jeremy Hunt.
Cllr James Jamieson, LGA Chairman, said: “Local government has great ambition to get on with the job of building homes, creating jobs, supporting businesses and investing in new infrastructure.
“However, massive increases in costs due to spiralling inflation and the National Living Wage rises risk undermining those ambitions, by forcing councils to cut local services to meet their legal duty to balance the books.
“Government will need to step in to ensure councils have the funding to meet these ongoing pressures, in order to protect the services that will be vital to achieve its ambitions to produce a more balanced economy.”