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New analysis has revealed that England\u2019s largest councils face overspending their budgets by over \u00a3600m this year, as \u2018uncontrollable\u2019 spending pressures drive up the cost of delivering services to vulnerable children, reports England\u2019s County Councils Network (CCN)<\/h3>\n<\/p>\n
County Councils Network (CCN) writes:<\/p>\n
Councils are warning that this leaves them \u2018running out of road\u2019 to prevent financial insolvency, with these overspends contributing to a projected total funding deficit of \u00a34bn for these councils over three years up to 2026.<\/p>\n
According to the analysis, these overspends, combined with future funding shortfalls, mean that one in 10 of these \u2018well-managed\u2019 councils are unsure or not confident they can balance their budget this year \u2013 a legal requirement \u2013 with this increasing to four in 10 next year and six in 10 by 2025. This is despite councils planning to make over \u00a32bn worth of \u2018challenging\u2019 savings and service cuts over the three-year period to prevent issuing Section 114 Notices.<\/p>\n
The County Councils Network (CCN) and Society of County Treasurers (SCT), which conducted the budget survey of 41 of county and unitary authorities, says that a combination of stubbornly high inflation, rising demand and \u2018broken\u2019 provider markets for children in care are leading to the historically high overspends…..<\/p>\n
While all council frontline services are experiencing higher than expected costs, increasing demand and an acute rise in the costs of placing children in care mean in-year spending on children\u2019s services is spiralling out of control, with almost half (\u00a3319m) of the projected \u00a3639m overspend attributable to this service.<\/p>\n
The CCN is calling for emergency funding for children\u2019s services this year and next to prevent them having to undertake drastic spending reductions to other services and reduce their reserves to \u2018unsustainable levels\u2019.<\/p>\n
The budget survey of 41 county and unitary councils, which cover half of England\u2019s population, reveals:<\/p>\n
Over recent weeks several county authorities have sounded the alarm bells on their in-year financial position, based on their first quarter of 2023\/24 projections. Derbyshire County Council have forecast that they are on course to overspend their budget by \u00a346m, Shropshire Council by \u00a337.6m, Suffolk County Council by \u00a322m and Hertfordshire County Council by \u00a316.4m. However, this survey shows for the first time the scale of the challenge across all of England\u2019s largest councils.<\/p>\n
With children\u2019s services making up almost half the projected overspends, councils point to a sharp increase in post-pandemic demand in children\u2019s services and the cost of care placements rising due to inflation and a \u2018broken\u2019 provider market. Recent research by the CCN showed there was a surge in over 20,000 extra referrals in county areas following the pandemic and over 1,000 more children in local authority care; a trend that has not abated since.<\/p>\n
Local authorities are putting in place emergency cost cutting and savings programmes to bring in-year expenditure down. However, with many of these spiralling costs in demand-driven statutory services, councils have little wriggle room to bring down costs.<\/p>\n
The CCN says that unless the government steps in and provides emergency funding, councils will need to make dramatic cuts to services both this year and next to balance the books to prevent their authorities running out of reserves and becoming insolvent.<\/p>\n
Cllr Barry Lewis, CCN Vice Chair and Finance Spokesperson, said:<\/p>\n
\u201cThis analysis lays bare the financial challenge facing county authorities. Historic in-year pressures are worsening an already bleak financial outlook, meaning our councils are facing down the barrel of a \u00a34bn funding black hole.<\/p>\n
\u201cThe majority of the \u00a3639m of additional and unexpected spending this year is simply outside of councils\u2019 control…..<\/p>\n
….But, unless we act now, this analysis shows that other well managed councils are running out of road to prevent insolvency.\u201d<\/p>\n