Just one in 10 councils believe they have been adequately involved in reorganisation plans: report
Senior local government figures have expressed serious concerns about reorganisation in responses to a Local Government Information Unit (LGIU) survey that revealed only one in 10 believe they have been adequately involved.
The LGIU's 12th annual State of Local Government Finance in England survey also found that section 114 notices are likely to be issued by 6% of councils in the next financial year, and a further 35% of councils reported being at risk of declaring effective bankruptcy over the next five years.
Extrapolating the results to the 317 councils in England, this suggests that 19 councils could fail to pass a balanced budget by March 2026, rising to 111 by 2030, the LGIU reported.
The survey - which took responses from council leaders, chief executives, cabinet members for finance, and senior finance officers - also showed that fewer than one in 10 senior council officials are confident in the sustainability of local government finance.
On reorganisation, the survey showed that just 1 in 5 think the proposed timescales for reorganisation are deliverable, while fewer than 1 in 4 believe that it will improve council finances.
In addition, fewer than one in five feel there has been sufficient clarity surrounding the Government's plans.
The report highlighted a comment from a director of finance at a county council, who told the survey that reorganisation is a "distraction" from needing to balance the books for all councils and "is making everything much more uncertain and challenging".
On finances, the report noted that surging service demand remains the greatest threat to the sustainability of local government finance, with over 90% of councils identifying it as a major issue.
It listed temporary accommodation, children's services and adult social care as the most critical areas of concern for councils.
The report meanwhile noted that among respondents, increasing council tax has been the most common approach to increasing income, with 94% of councils deciding to raise taxes.
Increasing fees and charges came second at 88%, followed by selling or transferring public assets (60%), increasing commercial activity (32%), and increasing borrowing (22%).
Nearly two-thirds of councils plan to reduce spending on services (63%), although many will make savings through efficiencies arising from the restructuring of services (47%), the report added.
The LGiU also noted that: "Alarmingly, most councils will draw from their reserves this year (56%) – the second successive year for nearly half of our survey (49%).
Elsewhere, the report found strong support for key reforms, such as implementing multi-year financial settlements, which was supported by 92% of respondents.
Additionally, 77% support council tax reform, and around 75% favour a broader fiscal toolkit, the report said.
Jonathan Carr-West, Chief Executive of the LGIU, said: "At the end of last year, the Government was clear that devolution, reform of the local government finance system and public sector reform should go hand in hand. Our survey shows in quite stark detail that they are not currently aligned in any meaningful way.
"On the one hand, the government has had some success in resetting the central-local relationship and there is near consensus that the promised multi-year settlements will benefit council finances."
He added: "Conversely, many councils are anticipating that reorganisation and the increase in National Insurance Contributions will heap added pressure onto already overextended council budgets.
"And, to put it bluntly, respondents are not happy with the way that reorganisation is being carried out."
To address these concerns, Carr-West called on the Government to implement a standing commission focused on local government reorganisation, establish "clearly defined roles" for councils in delivering the Government's five 'missions', and pursue a "proven-to-work revenue-raising options for councils to draw on".
Adam Carey
