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Nearly a third of councils in poor areas facing bankruptcy

GOVERNMENT cuts are forcing local authorities towards bankruptcy and threatening the most basic services to England’s most vulnerable people.

Worst-hit are councils in the country’s most deprived areas, where five local authorities are considering declaring effective bankruptcy this year or next.

Deprived areas make up 30 per cent of those under financial threat.

The danger was revealed in a survey of 47 local authorities in the north, the Midlands and on the south coast.

The five closest to bankruptcy are considering issuing notices called section 114, indicating they will be unable to balance their budgets in 2023-24.

Issuing a section 114 notice freezes all council spending.

Nine more councils, which are members of a Special Interest Group of Municipal Authorities (Sigoma), also say they may have to declare bankruptcy next year.

Sir Stephen Houghton, Labour leader of Barnsley Council and Sigoma chairman, said: “The government needs to recognise the significant inflationary pressures that local authorities have had to deal with in the last 12 months.

“At the same time as inflationary pressure, councils are facing increasing demand for services, particularly in the care sector.

“Pay increases are putting substantial pressure on budgets, and so the government must ensure that local authorities have the additional funding they need to fully fund these pay increases or risk impacting future service delivery.

“The funding system is completely broken. Councils have worked miracles for the past 13 years, but there is nothing left.”

The government axed council funding by 40 per cent between 2010 and 2020.

A government spokesperson said: “Councils are ultimately responsible for the management of their own finances.”


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