Nearly 14 years of Tory cuts have pushed a growing number of local councils onto the brink of collapse, an expert reveals.
And with 40 now at risk of joining the seven already made bankrupt, Dr Jonathan Carr-West said more ordinary people will start to feel the crippling effects of slashing vital services. The Mirror can today reveal a black hole of at least £1billion in council budgets.
Local Government Information Unit head Dr Carr-West warned No10’s £500million emergency funding announced last week will not be enough to stop a string of councils going bust under Section 114 notices.
He told how desperate town hall chiefs have never been so worried about the future of the services they provide, especially for the vulnerable in society. Care homes, buses, libraries, bin collections, street sweeping and lights face cuts as councils are further squeezed.
Dr Carr-West said: “The councils that are warning they might have to issue a Section 114 notice is just the tip of the iceberg. There are a whole bunch who think they are in serious risk of issuing a 114 but they haven’t made it public.
“When I talk to council leaders they consistently tell me this is the worst it’s ever been, that they are more worried than they’ve ever been. There’s a fairly familiar story that central government funding has been reduced by nearly 50% overall, but for some councils that is even around 90%.
“And the funding that does come is more short-term and less predictable. A lot is from the levelling up fund which councils bid for, so they don’t know year on year what they’ll get.
“If you live in an area that has not issued a 114, that doesn’t meant that everything’s fine, because many of those councils are still cutting to try to desperately stave off bankruptcy.
“Councils which aren’t issuing 114s are still closing libraries or reducing opening hours. They’re not mowing the grass in the park.
“You’re seeing eligibility criteria for care going up. You’re seeing councils turning down applications for education, health and care plans for children with special needs, you’re seeing street lights turned on for fewer hours. And yet you’re still seeing your council move further and further towards bankruptcy.”
Dr Carr-West said of the £500m emergency fund for councils: “It’s a sticking plaster solution and it’s not going to even hit the sides.
“The cynical view would be that it’s designed to push local government failing to the other side of the election.
“We’ve seen this steady drumbeat of councils issuing 114s, issuing warnings. The big question is will 2024 be the year in which that becomes a tidal wave for councils.
“It leaves the sector dependant on the whims of Whitehall. At the last minute they chuck us another £500million to get us out of trouble.”
Rishi Sunak agreed to the funding last week, but only after 44 Tory MPs signed an open letter to the PM demanding more cash.
The Local Government Association has also warned councils face a total funding gap of more than £4billion over the next two years, with one in five fearing they will go bust.
The seven already declared bankrupt are Nottingham, Birmingham, Woking in Surrey, Thurrock in Essex, Croydon, South London, Slough, Berks and Northamptonshire.
Residents are reeling from cuts and council tax hikes. The 40 others at risk include Leicester, Bradford and Havering, East London. Leicester’s mayor Peter Soulsby warned in October bankruptcy is “almost inevitable” as the city faces a shortfall of £34.1m this year.
He added: “I now fear for the future of services such as parks, sports, museums, libraries, cultural services and our community centres.
“Indeed all those services that make our city such a pleasant place to live.”
Havering council leader Ray Morgon said their government funding has been slashed from around £70million in 2010 to under £2million today. They are planning to close libraries and children’s centres and raise council tax to above £2,000 a year in a bid to balance their devastated budget.
The situation is worst for those councils already bust. Woking declared itself bankrupt in June with an unpayable deficit of £1.2bn.
It has proposed £12m in cuts next year including the removal of all public toilets and the closure of a swimming pool, a theatre, three leisure centres and 13 sports pitches.
Town halls owe a combined £97.8bn to lenders, according to recent research.
Mother-of-three Sabiha Aziz fears Birmingham’s brutal cuts to services will have a devastating effect on the care received by two of her children, aged 16 and 18, who both have additional needs and disabilities.
The 47-year-old from Yardley says this month she applied for a wheelchair assessment for her eldest son Adam, who is severely learning disabled and has epilepsy and non-verbal autism, but was told he no longer meets council criteria.
She says: “My children are entirely reliant on the council’s provision, from home-to-school transport to short breaks and respite, but now we are hearing that every single service is going to feel the impact.
“It’s a lack of empathy that will end up pushing families into crisis. Everything is under review and the level of uncertainty is really stressful.”
Sabiha said of Adam: “I worry about the medication that keeps him alive, which has become more difficult to get hold of. I worry about his specialist college placement he’s due to start in 2025, which is wholly dependent on local authority funding, and I’m bracing myself for a fight because it’s going to be expensive for them.”
Sarah Newton’s dad, Ernest Skerrett, is living in a dementia care home which has been earmarked for closure.
She now fears that the trauma of moving him elsewhere could have a devastating effect on the seriously ill 81-year-old. The mum of two became her dad’s carer in 2020 when he was diagnosed with vascular dementia. He moved to the Castle Grange care home run by Kirklees council, West Yorkshire, in March last year.
Sarah, 44, says: “When he got a place at the care home, which is just a short walk from my home, it changed our lives. It’s a purpose-built home which allows residents to wander freely, interact, and be cared for by trained staff. He’s so happy there now.”
But last September, she found out the council was planning to close the home in Huddersfield. Sarah says: “It’s so short-sighted. It will end up costing more.
“Changes to routines can cause a rapid decline in people with dementia, and there are no other dementia homes in the area. It’s so cruel.”
At risk councils
Below is a list of councils which have warned of bankruptcy or are in financial peril, and their projected shortfall. ** indicates councils which have not warned of bankruptcy but admit they are in financial peril.
- BATH AND NORTH EAST SOMERSET £6.5M Councillors blamed a drop in central government funding and rise in asylum-seeking children in the council care system for its budget gap.
- BOURNEMOUTH, CHRISTCHURCH AND POOLE £45M Authority admitted its forecasted shortfall equates to a 15% cut in all services and said it was “technically insolvent” because its reserves were not enough to cover an overspend on children with special needs.
- BRADFORD £103M It faces a £68m budget shortfall due to rising cost of children’s social care. A children’s outdoor activity centre is likely to be sold.
- BRENT £8M London borough warned that buildings could be sold, staff laid off, and cuts made to services for adults with physical and learning difficulties.
- BRIGHTON AND HOVE CITY £31M In December, council warned it was in “financial peril”.
- **BURY £22.6M In December, council warned the current £22.6m gap would reach £41.5m by 2027.
- CHELMSFORD CITY £4.2M Essex council says overspending on temporary accommodation is so unsustainable it could lead to cuts and bankruptcy.
- CHESHIRE EAST £11M In December, council warned it faced bankruptcy after spending millions preparing for leg of HS2, only for the government to cancel it.
- COTSWOLD DISTRICT £1.3M In October, councillors warned they would be unable to balance the books, blaming central government for failing to increase funding to deal with inflation.
- COVENTRY CITY £30M It could declare bankruptcy in 2024, blaming social care costs and inflation.
- **DERBYSHIRE COUNTY £46M Council introduced a raft of cuts in September to plug a £46m funding gap.
- DUDLEY £12M Council’s auditor reported earlier this month that “the risk of 114 is very high”. Council is proposing to increase council tax by 4.99%.
- DURHAM COUNTY £6.2M County council says it must make “difficult decisions” to avoid bankruptcy.
- GUILDFORD BOROUGH £3.3M Council avoided need for an S114, but said significant work was still required to produce a balanced budget for 2024-25
- HAMPSHIRE £56.7M County council has warned it needs to make drastic cuts, including ditching “safe” levels of core service, to avoid bankruptcy
- HASTINGS BOROUGH £3.8M Report last year warned council was at risk of bankruptcy, blaming cost of housing people in temporary accommodation.
- HAVERING £31M Last week, council warned it may go bust in six weeks, blaming care and housing costs.
- HERTFORDSHIRE COUNTY £13M In 2023, council introduced emergency measures to reduce shortfall.
- **ISLE OF WIGHT £12M Authority is expected to increase council tax to its topmost limit of 5%.
- KENT COUNTY COUNCIL £86M Budget gap is blamed on cost of adult social care, home to school transport, and children’s services.
- **KIRKLEES COUNCIL £47M Cost-saving plans include closing care homes for people with dementia and reducing number of council-run leisure centres.
- LEICESTER CITY COUNCIL £34.1M Sports, social care, parks, museums, and library budgets face cuts.
- **LEICESTERSHIRE COUNTY COUNCIL £100M (by 2027) Council admitted budget gap could exceed £100 million by 2027.
- MEDWAY COUNCIL £38.75M In August a financial report warned that bankruptcy was “very likely”.
- MIDDLESBROUGH £6.4M Councillors have warned of council tax rises of up to 50%.
- **NORFOLK £145.2M County council admitted last year it faces a £145m shortfall over next four years.
- **OLDHAM COUNCIL £27.9 (2022) Council predicts shortfall could top £42.5M by end of 2025.
- **ROCHDALE COUNCIL £14.1M (2026/27) Forecast gap for 2024/25 is £3.6m, rising to £14.1m in 2026/27.
- **SALFORD CITY COUNCIL £23.9M Mayor has asked Chancellor for more funds to cover funding gap.
- **SHROPSHIRE COUNTY COUNCIL £37.6M Council says demand for some services has been up to twice as much as its budget estimates.
- SOMERSET £100M Auditors warned council in November it could go bankrupt.
- SOUTHAMPTON CITY COUNCIL £37.8M City council is considering selling £85m of assets.
- ST HELENS £9.4M Report warns that if the projected overspend is not mitigated “considerably”, there is a risk of a Section 114 notice “in the medium term”.
- **STOCKPORT COUNCIL £3.75M Last year the council said it had managed to maintain services but needed to manage a forecast £3.75m deficit.
- STOKE ON TRENT CITY COUNCIL £14M Council blames funding gap on cost of children’s social care.
- **SUFFOLK COUNTY COUNCIL £22.3M It will cut spending, sell energy and use savings to stay afloat.
- **SWINDON COUNCIL £6.5M Councillors describe their finances as “on a knife edge”.
- TAMESIDE £28M Council proposes to make £18.71m of budget reductions and increase income by £5.70m through a council tax increase of 2.99%.
- TRAFFORD £25M Council is one of 20 lowest-funded and recently told residents they were lobbying government for the extra resources.”
- **WIGAN COUNCIL £32M Lancashire council was forced to access its reserves in 2021 and since then has faced severe shortfall. The latest figures show a £32million funding gap.
- TOTAL FUNDING SHORTFALL: £1,286,300,000