England & Wales Finance

Caught between a rock and a cliff-face

Image by Andrew Martin from Pixabay

BBC analysis of government figures focused on 11 councils that they believe are in risk of running out of cash, having run down their reserves rapidly over the past 4 years. This follows Cipfa’s Resilience Index which stopped short of naming and shaming. Response from the 11 councils was understandably defensive – many argued that their decisions to use reserves were part of a broader money-saving strategy or that the government’s figures were misleading – but the overall picture is hard to explain as simply the result of exceptional decisions.

Meanwhile, research by the Institute of Fiscal Studies mapped the rising demand for social care services for the elderly, which they warn will “overwhelm local authority budgets”.

Both studies add to the growing consensus within and beyond the local government sector that councils are in crisis. In making the trade-off between prudent financial management – to keep services running in case of emergencies, lulls in local income or demand increases – and spending today – to keep kids safe and people housed – councils have little room of manoeuvre and almost no information from the government on which to base their decisions.

As the gap between the looming financial reality and the cliff edge of uncertainty gets ever smaller, those in charge are being forced to take a terrible gamble on the lives of the most vulnerable.

LGiU is running the Local Finance Taskforce to find sector-led solutions to the funding crisis. The final report is due in July. For more information visit the project page.