Councils make funding plea after warning of £5.8bn shortfall

Councils have issued a fresh plea for extra funds amid warnings town halls face a £5.8 billion black hole by 2020.

The Local Government Association (LGA) said two-thirds of councils will be forced to find greater savings than expected to plug funding gaps next year, with problems set to continue.

The body representing councils across England and Wales called for new money to fund social care, claiming that many authorities would be left worse off as a result of reforms announced by ministers.

In December, Communities Secretary Sajid Javid allowed authorities to increase council tax by up to an extra 3% to fund social care.

He also announced a £240 million "adult social care support grant" will be created for 2017/18 by reforms to an existing scheme designed to encourage councils to build extra properties, known as the new homes bonus (NHB).

But early analysis by the LGA suggests 57 care authorities will be worse off as a result as they will lose more in NHB payments - compared to indicative allocations published in February 2016 - than they gain in the new grant.

Changes to the NHB mean councils need to achieve housing growth of greater than 0.4% to qualify.

The LGA said this will see 201 district councils lose out on NHB money they had planned for in 2017/18, pushing them closer to a "financial tipping point".

In a message to ministers before the final local government finance settlement for 2017/18 is confirmed, the LGA's Tory chairman Lord Porter said: "No new money from central government is being provided to councils in 2017/18. In fact, more than two-thirds of councils will actually be worse off next year than they were expecting.

"Councils need government to reverse new homes bonus cuts next year and fund the adult social care services grant with new money. This would avoid councils from having to make deeper than expected cutbacks to local services in 2017/18 and would provide some short-term support to councils providing social care.

"None of this changes the fact that all councils face an overall £5.8 billion funding gap by 2020. If councils stopped filling in potholes, maintaining parks and open spaces, closed all children's centres, libraries, museums, leisure centres, turned off every street light and shut all discretionary bus routes they would not have saved enough money to plug this gap by the end of the decade.

"The Government must allow local government to use the extra business rates income it will keep to plug this growing funding gap if local services are to stand any chance of surviving the sheer scale of funding cuts and pressures facing them both now and over the next few years.

"Genuinely new government money is also now the only way to protect the services caring for our elderly and disabled people and ensure they can enjoy dignified, healthy and independent lives, live in their own community and stay out of hospital for longer, and reduce the pressures on the NHS."

A Department for Communities and Local Government spokesman said: "For years councils have worked well delivering services for local communities while making efficiency savings, and this Government is determined that continues.

"Our historic long-term settlement is giving councils nearly £200 billion to spend over the course of this Parliament, and we recently increased social care funding so councils have £7.6 billion available over four years".