Council chiefs in Newcastle have hit out at ministers’ “failure” to address a cash crisis, after yet another local authority effectively declared bankruptcy.
On Wednesday, Nottingham City Council became the latest to issue a Section 114 notice – blaming escalating demand for services, particularly social care, and reductions in Government funding. It follows the likes of Birmingham, Croydon and Woking in taking the action, which stops all new spending other than on services that the council has to provide by law, amid major worries that the financial model for local government is “completely broken” and that more town halls will soon hit breaking point.
Newcastle City Council leader Nick Kemp, whose authority has warned it must make almost £60m of savings by 2027, warned on Wednesday evening that it is “a remarkably challenging financial situation for local government” and “clear that we are in it alone”. The Labour councillor added: “The failure of national Government to provide the support that is being cried out for across the nation for adults and children’s services is a scandal.”
Coun Paul Frew, the council’s cabinet member for finance, accused Chancellor Jeremy Hunt of offering “no reassurance and no hope for the sector” in last week’s Autumn Statement.
Newcastle City Council has said it must make £15.4m worth of savings in the next financial year – including cuts to its crisis support teams, beds for the homeless, and a service providing essential household items for people living in poverty. Further proposals to balance the books include a 4.99% council tax rise and increased charges for car parking, garden waste collection and replacement wheelie bins.
Coun Frew said: “The proposals are not easy, we don’t want to do them. We would rather provide services that we believe are more adequately funded – however, we are not the arbiters of our own fate on that.”
He added: “If we do not make these decisions year on year, and we are trying to make longer-term decisions that prevent these proposals in the future, then we are in a situation where we are not able to continue statutory services. As people have seen, the Conservatives have added another notch to their stick in the form of Nottingham. I want to get across that we are not in that situation in Newcastle – we are not complacent, but we have to take difficult decisions in order to continue delivering the best we can for the city.”
Colin Ferguson, leader of the city’s Lib Dem opposition, shared the concern about the “very few crumbs of comfort” being offered to local councils. Meanwhile, the Special Interest Group of Municipal Authorities (SIGOMA) warned that the Nottingham situation was “more evidence that the funding model is completely broken”.
Its chair, Coun Sir Stephen Houghton, added: “Our recent survey found that 30% of our members risked issuing a Section 114 notice in the next two years. There are fundamental systemic issues with the local government finance system that have resulted in an increasing number of councils reaching breaking point.
“Councils are operating with a spending power that is 19% lower in real terms compared to 2010/11. For more deprived councils the reduction has been greater – for the urban councils we represent, the average is 25%, for Nottingham it is 28%.”
The Department for Levelling Up, Housing and Communities was contacted for a response.
William Turner is a seasoned U.K. correspondent with a deep understanding of domestic affairs. With a passion for British politics and culture, he provides insightful analysis and comprehensive coverage of events within the United Kingdom.
