Half of councils plan to cut services despite council tax increases

Analysis by the Local Government Information Unit (LGIU) found that more than half of councils will be spending less on public services, increasing commercial investments or spending their reserves to make ends meet over the next year.

These measures are being taken on top of the more than 90 per cent of councils that are either raising council tax or increasing fees and charges.

Most respondents to the survey by the LGIU said that their would need to increase council tax by the largest amount permitted by the Government without a referendum, which is up to 2.99 per cent.

Almost one in five councils said that budget cuts in their 2023/24 finances will be visible to the public.

Nearly a quarter said that they plan to increase their borrowing in order to cope with both immediate and long-term pressures, with housing and homelessness named as the top issue for councils.

In addition over half said they would be increasing their commercial activity this year with local housing and commercial developments being among the most popular options.

Jonathan Carr-West, Chief Executive of LGIU, said: “In the 10 years since we started this survey, we have seen consistently low confidence in the sustainability of the local government funding system but this year’s results – at just 14 percent of councils across England – are at an all-time low.

“Day in and day out, councils continue to display extraordinary dedication, innovation and resilience in serving their communities but they are let down by a funding system that is not fit for purpose. This year’s State of Local Government Finance report lays bare the depths of this failure.

“Despite repeated promises from central government, we have seen no reform of local government finance and no return to multi-year funding. Instead, there has been a disjointed series of one-year settlements predicated on local authorities raising council tax by the highest amount permitted.

“And, even with these tax rises, councils are having to cut services, borrow more money and dip into their reserves year after year. Citizens across the country are failed in three ways: their bills rise, their services are cut and the councils they rely on edge ever closer to financial ruin.

“There’s no single solution to this problem. Instead, local government is crying out for a toolbox of fiscal devolution measures. It’s time to give power to councils and let them succeed where central government has comprehensively failed.”