Local governments in England staring 'bankruptcy' in the face
Years of financial strain have pushed services to the brink in an election year
Funding cuts
Kevin Muldoon-Smith is an associate professor in strategic public-sector finance at Northumbria University.
He told China Daily various factors had contributed to the crisis, the main one being central government funding cuts, resulting in "a whole system that exists on the margins of financial viability".
"Since 2016, when central government eyes were turned toward big ticket items, one of which was Brexit, very little attention has been paid to how local government finance should work," he explained. "After austerity, there was a concerted effort to reduce the size of the local state, and, in my view, cuts went as far as they could, so there's very little left to shake from the tree.
"The problem now is that trying to get hold of and fix local government finance is politically very painful. It's become less about consciously trying to reduce the state, more of a fear of the complexity of having to fix the problem, so this was always something that would come back to bite them. It will continue to happen and should be a big concern for the next administration."
According to the Institute for Fiscal Studies' Green Budget, published in 2021, "driven by cuts in central government funding, English councils' non-education spending per resident fell by almost a quarter in real terms between 2009/10 and 2019/20", forcing many councils into increasingly desperate management to try to stay afloat.
Clive Betts, chairman of the all-parties parliamentary levelling up, housing, and communities committee, told The Guardian newspaper there was an "out-of-control" financial crisis in local councils across England.
"Councils are hit by a double harm of increased demands for services while experiencing a significant hit to their real-terms spending power in recent years," he said. "The government must use the local government financial settlement to help bridge the 4-billion-pound ($5.07-billion) funding gap for 2024/25 or risk already strained council services becoming stretched to breaking point."
