Councils face increasing funding gap

Councils in England face a funding gap of £5.8bn if they want to maintain current service levels next year, according to the Local Government Association.
The association said that figures released today had been calculated by the total money councils will have during 2015/16 (£46.3bn) and the amount of cash they would need to maintain 2013/14 levels of service.
The findings also argue that the total funding gap is set to rise at an average of £2.1bn every year until 2019/20, when it will reach £12.4bn.
Outgoing LGA Chairman Sir Merrick Cockell said: “In recent years, local government has worked tirelessly to save billions while protecting services for those who need them most.
“But the scale of the challenge facing local authorities next year is stark. Council finances are on a knife-edge and the old way of doing things – including the way we care for our elderly population – just won’t work anymore.”
The £5.8bn shortfall will be caused by a combination of reduced government funding and rising demand on services, in particular from growing numbers of elderly people, according to the LGA.
It said the figures mean that councils will need to make huge savings before next April, equivalent to 12.5% of their total budgets.
And it warned that successfully integrating health and social care through the Better Care Fund next year is vital to saving the care system from collapsing.
The funding gap in adult social care alone already amounts to £1.9bn by 2015/16 – based on council adult social care budgets in 2013/14.
Cockell said: “Next year will be a make or break moment for adult social care, for local services provided by councils and for the NHS.
“The introduction of the Better Care Fund next year is a once-in-a-generation opportunity to both improve the quality of life for people in their older years and steer England’s social care system away from the road to financial ruin. The stakes have never been higher.
“Neither councils, the NHS or England’s elderly can afford for this not to work.”
The LGA’s Funding Outlook was based on illustrative 2015/16 finance settlement data, DCLG local authority revenue expenditure and financing data for 2013/14 budgets, along with the LGA projections of demand and inflation pressures.