North Yorkshire council leader Carl Les's warning as survey shows stark funding options for county authorities

The survey, carried out by the County Councils Network (CCN), comes as the organisation predicts a £1.7bn funding shortfall next year for its 36 councils, which they believe is likely to be exacerbated by the second lockdown.

The network has called for the Government to make a multi-billion-pound commitment to increase council funding in this month’s Spending Review.

CCN says that the survey shows that a failure to provide more funding at the review would result in local authorities implementing “visible and damaging change” to frontline services next year to balance their budgets - and could hamper their efforts to continue tackling the spread of Coronavirus.

The respondents, who are England’s largest county and unitary councils, said that after years of austerity there is limited scope to reduce non-care services such as libraries, bus routes and school transport, and that means the most severe reductions are likely to fall on social care services for children and adults, despite pressures created by the pandemic.

Coun Carl Les, leader of North Yorkshire County Council, said: “We pride ourselves on being a well-run local authority, but the onset of a second lockdown has exacerbated underlying funding gaps in our budget, creating huge uncertainty.

“With expenditure owing to the virus set to rise throughout the winter period, it is imperative that the Spending Review provides clarity and, above all, an uplift in funding for local authorities who have stepped up to the national effort.”

Councils say that the Government has provided emergency funding to cover the majority of additional council expenditure to date as a result of the virus, but they face millions in potential unfunded lost income from council tax and business rates. Every council in the survey has said that lost council tax income would impact on their finances moderately (29 per cent) or severely (71 per cent) next year.

CCN says these losses could run to £800m next year, increasing the 36 councils’ funding gap in 2021 to £2.2bn. So far councils say they have only been able to identify £485m worth of savings, leaving a £1.7bn gap.

Last month the Government provided its fourth tranche of emergency funding for councils.

However, county authorities only received 18 per cent of the pot despite representing 48 per cent of the population of England, said CNN, and leaders of those councils say they have "very little room for manoeuvre" when they are faced with additional expenditure demands resulting from the second wave of Coronavirus.

At this month’s Spending Review, councils say the Government needs to make a multi-billion commitment to increase council funding for the next year alongside an "income guarantee" to protect councils against losses in local taxation.

Coun David Williams, chairman of the County Councils Network, said: “Over the past decade, councils have done all they can to protect frontline services, transforming their organisations so they are more efficient.

"But as this survey shows, we are quickly running out of ways to meet the funding shortfall without dramatic reductions which will make visible and damaging changes to highly-valued services.

“The financial support provided by government over the past year has been very welcome. But even before the onslaught of a second wave, councils were facing difficult choices and they are now left with little room to manoeuvre over the coming months as they face further escalating costs resulting in an immediate cliff-edge next year.

“Councils have pulled out all the stops throughout this pandemic to protect residents, maintain vital services and support the economic recovery. To ensure that they can continue to do whatever it takes over the winter to combat Coronavirus and to prevent severe reductions to services next year, they need a significant increase in funding for 2021/22, alongside an income guarantee to protect against losses in council tax.”

The Ministry of Housing, Communities and Local Government spokesperson said: “We’re giving councils unprecedented support during the pandemic, with nearly £1.2 billion in non-ringfenced emergency funding for county councils. Additionally, their core spending power increased by £974 million in 2020/21 even before emergency funding was announced.

“We will continue to work closely with councils as they support their communities through the pandemic and if any are concerned about their future financial position they should contact the department.”

In numbers

The survey, which received a 100 per cent response rate, shows that over the next two years:

- Just one in five (22 per cent) are ‘confident’ they can deliver a balanced budget next year without ‘dramatic’ reductions to services. Confidence drops further in 2022/23, with just one local authority confident of setting a balanced budget that year. Over half said service reductions would impact their efforts to tackle Coronavirus, with 60 per cent stating it will lead to a ‘fundamental reduction’ in frontline services.

- Just one council said it would be able to invest in adult social care over the next two years if extra funding was not made available. Over half said they were planning to reduce access to care packages and/or introduce new charges for services ‘moderately or severely’, with 42 per cent implementing the same severity of reductions to personal budgets and mental health services. As a result, almost half (46 per cent) said it would mean less people would be able to access council-arranged care packages and 65 per cent said it will lead to more demand on the NHS.

- There is less scope to reduce services in children’s social services, with all councils seeing a rise in vulnerable children. However, 27 per cent of councils said they will have to implement moderate or severe reductions to services for children in council care and subject to safeguarding, and 33 per cent planning the same severity of reductions to early years and youth services. Three-quarters of councils say these reductions to preventative children’s services will lead to more costs in future years.

- Roughly a third of councils say that they have no scope for savings in libraries, bus subsidies, and school transport because these services have already been reduced to minimum levels. However, for those that have not, 33 per cent plan moderate or severe cuts to libraries and 24 per cent say the same severity of reductions is planned for bus route subsidies.

- Just under a third of councils (29 per cent) say that they will plan ‘moderate or severe reductions’ to road repairs and pothole filling. As a result, half of respondents said that this would lead to a further deterioration of local roads.

- When asked about the Coronavirus task in hand, two-thirds (68 per cent) said they will not be able to invest in supporting the economic recovery, and as a result, the same number said it would impact on their efforts to assist local recovery efforts. In total, 60 per cent of councils said service reductions mixed with council tax increases next year would result in greater economic hardship for residents