The roof hasn’t been fixed, and now the storm is coming
Whilst local government reorganisation is long overdue, it itself does not address the funding shortfalls that every local authority faces. Certainty in budget setting is a dream of many local authorities. To be able to set a department budget for four years with certainty does sound like far-fetched fantasy in local government. The dependency on the whims of central government (does not matter who) has made local government a compliant agency of central government rather than a pillar of the local community. After all, every councillor is elected to represent their communities rather than Westminster in our communities.
The Local Government Finance Settlement for 2025/26 falls short of addressing the severe financial challenges facing many local authorities in England. Despite some additional funding, councils continue to struggle with rising costs, increasing demand for services, and the long-term impact of inflation. There is a clear need to address the funding of local government and put stability at the centre which serves the local people we were elected to represent.
With the way funding works at the moment, local authorities are becoming the social service departments of central government with the occasional bin collection. Pots of money are absorbed by the centre due to short-term need and just a few cases from adult and children's services can create a million-pound hole in budgets very quickly. Adult social care remains one of the biggest pressures, with rising demand, demographic changes, and workforce challenges driving up costs. In areas like Norfolk, where 80% of new residents are retirees, this strain is even greater.
Inflation and wage increases, particularly in social care and transport, add further financial burdens. While the government has provided some short-term funding, it is insufficient to meet the needs of an ageing population. Similarly, children's services face increasing costs, with more children requiring support and placements becoming more expensive. The need to fund these comes at a cost to other services that have an important function for the communities that we serve.
Councils also face rising welfare and housing support demands due to the cost-of-living crisis. Yet, funding has not kept pace, forcing councils to make difficult decisions about service provision. A County Councils Network survey found that over four in five counties are financially worse off than before the Autumn Budget, with county and unitary councils facing £454m in costs from the National Insurance increase but receiving just £176m in government compensation.
These costs create holes in budgets that need to be filled, leading councils to look to cash reserves to cover services on a day-to-day basis. For example, some councils have diverted the monies intended to deliver housing licensing schemes to plug budget holes. This is forgotten in future budgets. A local authority that I have worked with used a delivery partner as a way to keep the budget secure for five years, this allows for the security of budget allocation and to know what costs will be over the five years. This has allowed the budget to be fixed, providing security to the local authority and the staff. However, this approach needs to be expanded across services, not just the usual ones. Security of costs would allow budget planning across the local authority with certainty for taxpayers.
The delivery of housing inspections, which benefits tenants and allows the local authority to discharge their duty, benefits the whole council. Housing inspections directly save money in health, as it removes the cost for the local authority by improving living conditions and preventing health issues linked to poor and unsafe housing. This was shown in the government's review into damp and mould, across all tenures. But short-termism rules the day.
Funding of local government has never mattered more, as it directly affects the quality of life for many of our most vulnerable residents. It is through shaping the local services to the needs of local people that councillors play a vital role, a person in Whitehall can never understand every village, town and city and never mind the individual wards. The ability to put a funding mechanism for local government that has certainty will allow local councils to make the best decisions for the local community that they serve.
The changes to structures do not move away from the cost pressures. We have all knocked on doors and we have all heard the same message ‘My council tax is too much and you can't even fix the potholes’. These issues matter. The more people feel disconnected from how their tax is spent, the greater the voter deficit, which makes politicians look out of touch.
Local democracy matters. Having different delivery priorities in local areas is why councillors of different parties are elected. If we are just agents of central government then the votes don't matter. Creating a stable funding mechanism in local government that has certainty, is important so councillors and communities can prioritise what is important to them.
