Think Tank Warns of Financial Crisis as More Councils Reach Breaking Point while Political Parties Stay Quiet
The Institute for Fiscal Studies warned of impending cuts to council services and the increasing risk of councils running out of money.
In a recent report, the Institute for Fiscal Studies (IFS) revealed that many councils are on the brink of financial collapse.
As the election approaches, political parties have remained quiet on how they plan to fund local authorities, creating uncertainty, according to the IFS.
The IFS analysis highlighted the lack of commitments from major parties, unlike in 2019, leaving councils vulnerable to budget cuts.
The think tank predicts that without a decrease in spending pressures, cuts to services are inevitable, especially in less affluent areas, potentially pushing more councils into financial crisis.
Based on their findings, the IFS raised concerns about the possibility of additional councils facing bankruptcy, similar to recent cases in Birmingham, Thurrock, and Woking.
The think tank also mentioned that unprotected spending, like grant funding for councils, may face cuts as the next government juggles various financial commitments.
In scenarios where grant funding is frozen or reduced, coupled with varying tax increases, the impact on overall funding power varies.
Considering that council tax plays a significant role in expenditures, the IFS anticipates tax changes will have a more substantial effect than grants.
The think tank emphasized the challenges faced by councils in deprived areas, suggesting that redistributing grant funding may help offset the disparities.
The IFS stressed the need for a comprehensive review of local needs, especially amidst limited funding. They also advised the government to allocate additional funds to address rising demand in areas like adult social care.
According to the County Councils Network and the Local Government Association, councils are confronting substantial funding gaps due to escalating costs and increasing demand for essential services.
In response to these challenges, various organizations have launched a campaign urging national party leaders to prioritize adult social care.
