Local government faces a funding gap of £12bn by 2025– 50% higher than a previous estimate by the Local Government Association – according to new analysis by the County Councils Network.
A report by accountancy firm PwC for CCN found that counties, with a black hole of £4.1bn by 2024/25, would be the worst hit.
In February, the LGA said that councils face a shortfall in funding of £3bn next year, rising to £8bn by the middle of the next decade.
Paul Carter, chairman of the CCN, said: “If government does not provide additional funding for councils over the medium term, many local authorities will resort to providing the bare minimum, with many vital services all but disappearing, particularly preventative services.
“Even these draconian cuts won’t be enough for many well-run councils to balance the books and it will leave our finances in disarray with many of us struggling to deliver even the basic level of local services.”
The difference between the LGA and CCN funding gap estimates are partly explained by the fact that the former started from 2017, while the later starts at 2015.
In addition, the CCN study assumed 0% growth in business rates (the LGA assumed roughly 3% a year on the basis of Office for Budget Responsibility figures) and 2% growth in council tax income (LGA assumed 3%).
Peter John, chair of London Councils, said: “The entire sector is crying out for more certainty over our finances and better recognition of the costs we face.
“No matter what type of local authority you look at, we are united in the scale of the financial challenge we face and the need for the Spending Review to offer us all a long-term, sustainable funding settlement.”
Last month, chancellor Philip Hammond rejected the Local Government Association’s (LGA) estimate of the scale of what he described as the “so-called funding gap” faced by local authorities.
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