The multi-billion “black hole” in England’s council finances – which has pushed several councils to the brink of bankruptcy – could not be fixed by local raters alone, who would face unrealistic council tax rises of up to 20%, the Local Government Association (LGA) said. Privately, many in local government believe few authorities would take the political risk of raising council tax even marginally above current caps when many of their residents are struggling in the midst of a brutal cost-of-living crisis. Reports earlier this week said the government would try to avert a financial crisis by announcing in Thursday’s autumn statement that it would lift the long-standing cap limiting annual council tax rises to 2.99% plus 1% for social care. Local rulers believe that even relatively small council tax increases above the current caps would be unfair to ratepayers and are unlikely to raise the sums needed to tackle the crisis. Each 1% rise would generate £309m for English councils, barely touching the deficit sides, the LGA estimates. Two Tory true-blue county councils, Kent and Hampshire, shocked Westminster this week when they told the Premier, Rishi Sunak, they were “sleepwalking into financial ruin” with the crisis engulfing local government putting them and other authorities. at risk of bankruptcy in the coming months. They called for emergency help for councils along with a clear plan for “long-term sustainability”. But there is speculation that ministers will announce this year’s council funding will be “carried forward” to next April, leaving town halls to cut local services or raise council tax to try to balance their budgets. There are concerns that any reliance on council tax to cover rising costs is unfair because the most deprived areas of the country – where demand for services is highest – are less able to raise the funds they need. LGA chairman James Jamieson said: “Local government remains the fabric of our country, but many of the vital services we provide are facing an existential crisis.” Failure to provide certainty of long-term funding will force councils to make significant cuts to services next April, including aged and disabled care, child protection, homelessness prevention, leisure centers and bin collections, he added . “While council tax is an important funding stream, it has never been the solution to the long-term pressures councils face, raising different amounts in different parts of the country – regardless of need – and adding to the financial pressures facing households,” he said. The LGA estimates that English councils face a collective £2.4bn budget shortfall this year due to unexpectedly high inflation in staff pay, energy costs and contract prices. Without government intervention, the deficit will rise to £3.4bn in 2023-24 and £4.5bn in 2024-25. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. In a further sign of the bleak financial environment facing councils, bosses at the local adult social care authority said on Tuesday they had neither the funding nor the workforce to meet the needs of older and disabled people this winter. The annual autumn survey by the Association of Directors of Adult Social Services found that nine out of 10 managers would struggle to cope with existing resources. One in 10 care worker posts were vacant, while they collectively made an extra £113m of cuts on top of £597m of savings already announced. Cathie Williams, chief executive of the association, said: “This is the gloomiest autumn survey we have ever had. Only a few managers have the belief that they might be able to get through the winter with the funding they have and the care workers available locally. “We were scared in the summer. now we are afraid. This affects us all.”
