Nearly one in five English councils face effective bankruptcy, according to their own leaders.
A survey by the Local Government Association found that almost half of England’s 317 councils believed they would not have enough money in 2024-25 to ensure the delivery of essential services.
More than 60 said they were at risk of having to issue section 114 notices – signalling an inability to fulfil their legal duty to balance the books – next year.
The LGA now expects 12 councils to issue section 114 notices in 2024-25.
Nearly two thirds of council leaders and chief executives said there were no announcements in the autumn statement that they thought would help them deal with their council’s financial position.
The LGA has previously warned that councils face an overall funding gap in the next two years of £4bn. It said that because no money had been provided for councils in the chancellor’s Autumn Statement last month, deep cuts would be required.
Nine councils have issued section 114 notices since 2018, with Birmingham, Woking and Nottingham doing so this year.
The LGA said the circumstances that have led to a Section 114 notice so far have been unique to each local area and the pressures they face.
However, all those that have had to curb spending in this way have faced the same underlying pressures. The LGA said that this included the impact of the pandemic, rising demand for services and the extra costs to provide them. But the core issue, it said, was the cut in councils’ core spending power falling by 27% in real terms from 2010/11 to 2023/24.
Levelling up secretary Michael Gove is due to be grilled by MPs about local government financing later today.
