“Extra government funding will help councils this year, but acute funding pressures remain and are forcing many councils to make stark choices about what popular services to cut."
Two thirds of councils surveyed by the Local Government Association (LGA) warn communities will see cutbacks to local neighbourhood services this year – such as waste collection, road repairs, library, and leisure services – as they struggle to plug funding gaps.
Ahead of the Spring Budget, the LGA said the Government will have to provide further funding to address the growing financial crisis facing councils and local services. Ahead of the General Election, councils say all political parties also need to provide manifesto commitments to reform the entire system of funding local government so it can deliver all vital local services.
In recognition of the acute funding and demand pressures facing councils, the Government provided £600 million extra funding in 2024/25 to help protect services from some cuts and support councils to try and set balanced budgets this year. This additional funding is in the context of the LGA’s assessment of a £4 billion funding gap across 2023/24 and 2024/25
A new survey by the LGA shows most councils said the extra money would help to some extent, but the majority (58 per cent) said this impact would be “small”.
Eighty-five per cent of councils said they would still have to make cost savings to balance their 2024/25 budget.
Demand and cost led pressures on services such as adult and children’s social care, home to school transport and homelessness services are rising and of respondent councils with social care functions, three-quarters say that even with extra funding, cost savings would be needed in their adult social care budget, and almost seven in 10 (69 per cent) reported that savings would be needed in their children’s social care budget.
Protecting these services from deeper cuts is having a knock-on effect on the wide range of other council services that every resident expects and relies on. The LGA survey also lays bare the tough decisions facing councils and the potential impact on the services our communities rely on every day.
It reveals that after the funding announcement, over half (52 per cent) of all respondent councils anticipated having to make cost savings within at least three different neighbourhood services, whilst over two in five (41 per cent) anticipated making cost savings in four or more services.
It shows that:
- More than half (55 per cent) with responsibility for the services reported that cost savings would be needed in their sport and leisure service provision with 48 per cent reporting that cost savings would be needed within their library services.
- Around half (48 per cent) with responsibility for the services reported that cost savings would be needed in their parks and green spaces service provision with over a third (34 per cent) reporting the need for cost savings in their provision of museums, galleries, and theatres.
The Government has encouraged councils to consider using their reserves to plug funding gaps this year with the LGA survey showing that 7 in 10 councils are using reserves to set a balanced budget in 2024/25. However, reserves can only be spent once and the LGA insists that encouraging councils to spend them in this way could perversely put more local areas on the fast-track to financial crisis.
While councils have made huge efforts over recent years to reduce costs and make savings by transforming the way services are delivered - and there are still opportunities to make further savings through shared services and new technology - 2024/25 is the sixth one-year settlement in a row for councils which continues to hamper financial planning and their financial sustainability.
Alongside additional funding to protect services in 2024/25, the LGA said the Government needs to provide councils with greater funding certainty through multi-year settlements and more clarity on financial reform so they can plan effectively, balance competing pressures across different service areas and maximise the impact of their spending.
The LGA’s submission to the Chancellor - ahead of the Budget on March 6 - sets out the major contribution councils could make to the delivery of major national priorities if it were empowered and sustainably to do so. Our call to government is not just to bridge a funding gap, important though that is, but to trust councils to reshape services and communities to support people to work, places to grow and communities to thrive.
This requires a new central and local settlement that builds on the successes of devolution to date - rolling out what has been proved to work to all councils - and looking further and deeper into what more could be achieved to deliver the housing and growth the nation needs and achieve national net zero ambition.
Cllr Shaun Davies, LGA Chair, said:
“Extra government funding will help councils this year, but acute funding pressures remain and are forcing many councils to make stark choices about what popular services to cut.
“This will not go unnoticed by our local communities. It means less potholes filled, more streetlights dimmed or turned off, and fewer library or leisure services.
“Without further funding, cost and demand pressures will continue to stretch council budgets to the limit and lead to more of the cherished services our communities rely on every day from having to be drastically scaled back or lost altogether as councils are increasingly forced to do more with less.”
Notes to editors
In January 2024, the LGA sent an online survey to the chief executives of all member councils in England. The purpose of the survey was to understand the decisions that councils were making to balance their budgets for the next financial year, and how these decisions might impact the services that councils provide to residents. A total of 96 chief executives responded – a response rate of 30 per cent.
On 24 January 2024, the government announced an allocation of £600 million in additional funding for councils for financial year 2024/25.
Following this announcement, in February 2024, the LGA sent a second online survey to the chief executives of all member councils in England. The purpose of this follow-up survey was to assess what impact, if any, this funding had had, and what challenges, if any, remained. A total of 102 chief executives responded – a response rate of 32 per cent. Although the first survey was conducted before the funding announcement, the findings still offer a valid insight into the decisions that councils are having to make to set a balanced budget for 2024/25.
LGA Local Government Budget Setting Surveys 2024/25
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