Charities warn of ‘devastating knock-on impact’ of English councils’ financial crisis

<span>A Citizens Advice mobile unit. The charity and Age UK said it was ‘deeply troubling’ the crisis was putting voluntary services at risk.</span><span>Photograph: Karen Robinson/The Observer</span>
A Citizens Advice mobile unit. The charity and Age UK said it was ‘deeply troubling’ the crisis was putting voluntary services at risk.Photograph: Karen Robinson/The Observer

Charity leaders have warned of the “devastating knock-on impact” of the financial crisis in English town halls, as evidence emerges of cuts and closures at local voluntary groups, where vital grant funding has been cut by stricken councils.

Citizens Advice and Age UK – two of the UK’s biggest and best known charities, overseeing networks of hundreds of local branches providing vital care, advice and support to millions of people every year – said it was “deeply troubling” that the crisis was putting voluntary services at risk.

A report by a cross-party group of MPs this week warned of an “out of control” municipal financial crisis that threatened to drag even well-run councils into bankruptcy and put local services at risk. It called on ministers to urgently inject £4bn into town hall budgets.

Four councils have gone bust in the past year while others said that only with drastic cuts can they avoid imminent insolvency in the face of soaring social care, homelessness and special educational needs costs. Charities fear community grants are seen as a priority for cuts as town halls retreat to “bare legal minimum” levels of service.

Emerging cuts to charities include:

  • The closure of Mansfield Citizens Advice after Mansfield district council cut its £55,000 core costs grant. Based in one of England’s most deprived areas, the charity helped 2,400 people last year with debt, housing and poverty issues. Citizens Advice Woking, in Surrey, also faces closure after bankrupt Woking borough council cancelled its £180,000 grant.

  • Community First bus services linking communities in rural Hampshire are under threat after Hampshire county council, which faces a £132m deficit over the next two years, cut funding by £500,000. It has also scrapped a £500,000 grant that funds volunteer support and legal backup for more than 650 local grassroots charities.

  • Neighbourhood charities in Birmingham have warned that thousands of children are at risk as a result of proposals by the bankrupt city council to cut an £8m early help contract providing safety net services to thousands of families struggling with poverty, mental illness and addiction.

Dame Clare Moriarty, the chief executive of Citizens Advice, said: “As our advisers see increased numbers of people in dire situations, unable to afford basics like housing, energy and food, our work has never been more important. But our ability to make a difference in communities depends on funding.

“Local government has been a crucial funder for charities like Citizens Advice, so the current crisis is deeply troubling. We’ll continue working to make sure we can be there for as many people as possible. But it’s vital the government considers the devastating knock-on impacts of local authority funding cuts on community services.”

Caroline Abrahams, the charity director of Age UK, which oversees a network of about 125 local Age UK groups providing services for older people such as day centres and befriending schemes, said it was seeing local voluntary organisations reduce services, merge, or shut altogether as a result of council funding cuts.

“From what we see at Age UK and hear from our local partners, there’s no doubt that the financial crisis impacting many councils is having serious knock-ons for voluntary and community services and, by extension, members of the public and the communities in which they live,” she said.

Sarah Vibert, the chief executive of the National Council for Voluntary Organisations, said a “bleak picture” was forming for many charities reliant on council grants: “My concern is critical preventative services provided by local third-sector groups are shrinking and closing and we have not seen the worst of it yet,” she said.

The Labour leader, Keir Starmer, recently made the future of the voluntary sector a political dividing line, contrasting Labour’s support for a “society of service” built around partnership with community groups, against what he called divisive Tory attacks on “woke charities”.

A Department for Levelling Up, Housing and Communities spokesperson said: “We recognise councils are facing challenges and that is why we recently announced an additional £600m support package for councils across England, increasing their overall proposed funding for next year to £64.7bn – a 7.5% increase in cash terms.

“This additional funding has been welcomed by leading local government organisations, but we remain ready to talk to any concerned council about its financial position.”