Yahoo Finance Why council funding may be the next hot potato for Rishi Sunak to handle
Dozens of Tory MPs have written to Rishi Sunak demanding “emergency” funding for councils which they say are facing cash pressures “like never before” amid an election year.
The 44 Conservative MPs – including seven former cabinet ministers – have urged the Prime Minister to step in to help local authorities with a brewing financial crisis.
Some councils face financial insolvency and risk being unable to deliver a balanced budget in 2024-25, MPs have warned Sunak and levelling up secretary Michael Gove.
Signatories include former immigration minister Robert Jenrick, former home secretary Priti Patel and former cabinet ministers Therese Coffey, Brandon Lewis and Jake Berry.
Upping the pressure, they suggested that without efforts to “rectify the situation”, MPs would not be “able to support the vote” on local government finance in Parliament next month.
According to the Times, Sunak is preparing to deliver additional funding following the letter, which could see some extra hundreds of millions handed to England’s town halls – but a decision will depend on the Office for Budget Responsibility’s (OBR) headroom forecasts.
It comes as the government is consulting on the final Local Government Finance Settlement ahead of publication next month, which confirms council funding in England for 2024-25.
Ben Bradley, chairman of the County All-Party Parliamentary Group (APPG) of MPs, warned authorities currently setting next year’s budgets were being forced to propose “substantial reductions” to services, as well as a “double whammy” for residents of council tax rises.
Cuts could fall on services including public toilets, play areas, libraries, leisure and sports facilities, while there have been warnings councils could sell off assets to dodge bankruptcy.
“No council leader will take any pride in taking this action, but they simply have no choice after the Autumn Statement left them in a significantly worse position,” Bradley said.
“We are urging the government to rectify the situation as soon as possible so colleagues are able to support the vote for the final Local Government Finance Settlement next month.”
The letter comes after November’s Autumn Statement saw no new funding announced for councils – despite warnings counties were set to overspend by £650m, with a £4bn deficit.
While the National Living Wage rise left some 37 councils over £230m worse off next year, the County Councils Network (CCN), which organised the letter alongside the APPG, said.
While Barry Lewis, CCN vice-chairman, added: “This year we find ourselves under financial pressure like never before.
“We desperately need government support to stave off the extent to which we will have to make unpalatable reductions to services.”
A Department for Levelling Up, Housing and Communities (DLUHC) spokesperson said: “We recognise councils are facing challenges and that is why we have announced a £64bn funding package – an above inflation increase at an average of 6.5 per cent – to ensure they can continue making a difference, alongside our combined efforts to level up.”
They added: “We recently consulted on the final settlement for next year and are now considering the responses carefully.
“Councils are ultimately responsible for their own finances, but we remain ready to talk to any concerned about its financial position.”
