English councils warn funding offer will bring tax rises and service cuts

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English councils will be forced to raise taxes and cut frontline services to avoid effective bankruptcy, local government networks have said, as they criticised a new funding offer from ministers.

Michael Gove, secretary of state for levelling up, housing and communities, on Monday announced a £64bn settlement for local authorities in 2024-25, representing an annual increase of 6.5 per cent with an additional £1bn in grants for social care.

The County Council Network, representing the largest local authorities in England, described the offer as “bitterly disappointing” in light of soaring costs and rising demand for services.

“With no additional funding announced, our councils will have no choice but to implement more severe reductions to services and to levy higher council tax rises,” said Barry Lewis, CCN vice-chair and finance spokesperson, on Monday.

He added that an increasing number of local authorities would “struggle to deliver a balanced budget next year” if the government fails to improve its offer.  

A record number of councils have been forced in recent years to issue “section 114” notices declaring their inability to meet a legal requirement to balance the books.

A survey by the Local Government Association, another cross-party body representing local authorities, found earlier this month that one in five senior executives in England’s 317 councils thought it “likely or fairly likely” they would have to issue a section 114 notice this year or next.

Shaun Davies, LGA chair, said it was “unthinkable that government has not provided desperately needed new funding”, adding the settlement had left councils facing an overall deficit of £4bn this year and next.

Gove said on Monday that he recognised the challenges facing local government. “That is why we have announced a £64bn funding package to ensure they can continue making a difference.”

Simon Hoare, minister for local government, said the settlement was above inflation and “good news”. “We are, and will, continue to work alongside councils to ensure quality and reliable services are provided to those who need and use them.”

Separately on Tuesday Gove is expected to clamp down on poorly performing council planning departments, whose delays he will claim have held up house building in their area.  

Housebuilders have argued, however, that Gove is attempting deflect attention from the government’s own failure to relax stringent planning permission rules and kowtowing to the “Nimby” lobby.

In a speech, Gove will call out local authorities that are falling behind and say that where expectations for the planning system are not met, he will intervene.

An official from the Department for Levelling Up, Housing and Communities said: “The housing secretary has already told councils that they need to step up, and we are providing a lot of support to help them do so — so those that continue to drag their feet can expect to face government intervention.”