Funding gap growing as Councils:- "firmly in eye of inflationary storm"

COUNCILS in England face a funding gap of:- £4 billion over the next 2 years the Local Government Association reveals.  This is a:- £1 billion increase since the LGA's initial analysis in July as cost and demand pressures continue to rise.

New LGA analysis; published ahead of the Autumn Statement next month; also shows that by 2024/25 cost and demand pressures will have added:- £15 billion (almost 29%) to the cost of delivering Council services since 2021/22.

Councils are facing an:- "inflationary storm" which is adding unsustainable costs onto Council budgets. Some Councils have warned these costs are threatening their financial sustainability, not least because Councils have already absorbed a 27% real terms cut in core spending power since 2010/11.

Many Councils are working proactively with each other to share and transform their services to ensure they continue to deliver high quality services to residents.

In its submission to the Chancellor, the LGA said the Government needs to provide immediate funding, so Councils can deliver the 2023/24 budgets they set out in 2023, and meet ongoing cost and demand pressures.

Government also needs to ensure that Councils have sufficient resources to set balanced budgets next year without having to make drastic cuts to services.

Additional resources cannot come solely from hard-pressed Council taxpayers, the LGA said:- "Council tax increases are not the long term solution to the financial challenges facing Councils particularly during a Cost of living crisis. In addition, increases in Council tax raise different amounts of money in different parts of the country and it would fall short of the sustainable long term funding that is needed."

The LGA is clear that using financial reserves to plug funding gaps is also not a solution to the long-term financial pressures that Councils face. Councils hold reserves so they can plan for the future and deal with known risks. Reserves can only be spent once and will rapidly be depleted if used to meet Councils' unfunded day to day spending.

Councils also want to work with the Government on a long term plan for greater funding certainty for Councils through timely multi year settlements and more clarity on financial reform.

Cllr Pete Marland, Chair of the LGA's Resources Board, said:- "Councils remain firmly in the eye of the inflationary storm and severe funding and demand pressures mean that Council finances are under pressure like never before. None are immune to the risk of running into financial difficulty and others have already warned of being unable to meet their legal duty to set a balanced budget and are close to also having to issue Section 114 notices. The easy savings have long since gone. Councils are being faced with tough decisions about cutting valued services, increasing Council tax and fees and charges during a Cost of living crisis. We urge the Chancellor to act to address the acute financial challenges faced by Councils. This is vital to protect the local services our communities rely on every day but also to reduce costs falling on other public services and support the delivery of key Government agendas on areas such as housing, levelling up and climate change."

Money wasted on HS2 could have purchased 280,000 new homes

RESEARCH from property developer, Stripe Property Group, has found that the money wasted on HS2 could have covered the purchase of over 280,000 new homes across the 33 key locations that were due to benefit from the high speed rail network.

Stripe Property Group looked at how the:- £92bn wasted on HS2 could have helped boost the housing market in areas due to benefit based on the current average price of a new-build home in each location.

The research shows that there were 33 key network locations along the H2S line and had each received a fair split of the wasted:- £92bn, this would have equated to a hefty:- £2.8bn per location.

Based on current new build values in each area, the:- £92bn wasted on HS2 could have paid for 281,011 brand new homes across the HS2 network, an arguably far more beneficial way to have spent the money.

Durham could have seen the biggest benefit in this respect, where the average new-build house prices means 13,200 homes could have been purchased with the:- £2.8bn fair split of the:- £92bn cash pot.

In Motherwell, as many as 12,212 new homes could have been purchased, while a fair split of the:- £92bn would also have paid for over 10,000 new homes across with:- Stoke (11,305), Lockerbie (11,047), Sheffield (10,720), Darlington (10,670), Carlisle (10,514), Glasgow (10,277), Nottingham (10,227) and Liverpool (10,181).

Even in the capital where house prices are at their highest, the money wasted on HS2 could have purchased almost 3,000 new homes around London Euston and almost 3,500 around Old Oak Common.

Managing Director of Stripe Property Group, James Forrester, commented:- "While the aim of HS2 was to boost a lot more than the local housing market in areas due to benefit, the unfortunate reality is that:- £92 billion pounds has been spent with no benefit coming at all. To put that sum into perspective, no less than 280,000 brand new homes could have been purchased across key HS2 locations with the money wasted. This will be a hard reality for many to swallow who remain priced out of the current market due to the Government's continued failures to deliver enough homes to market."

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