Local Government Finance Emergency

Our local councils are the front line of our democracy. From social care and schools to housing and bin collections, they provide the essential services that hold our communities together. But today, after years of Conservative neglect and a lack of seriousness from the new Labour Government to tackle the financial crisis in local government head-on, our councils are in survival mode.

Since 2018, seven councils in England have been forced to admit they cannot meet their spending commitments, and in the last year alone, 30 councils required emergency government bailouts. This emergency threatens the local services we all rely on.

Today, our members passed a policy calling for an end to the sticking plaster approach, demanding a fair, long-term funding settlement for every community.

A System at Breaking Point

For too long, central government has handed down deep cuts while piling on more pressure. Councils are facing a perfect storm:

• The Social Care Crisis: Skyrocketing costs in adult and children’s social care are draining budgets, forcing cuts of up to 70% in other vital areas.
   
• The SEND Funding Gap: The high needs deficit in Dedicated Schools Grants (DSG) for SEND is estimated to hit a staggering £5 billion this year.
   
• The Housing Crisis: The Conservative and Labour failure to boost the building of social homes and with councils spending more and more on temporary accommodation and central government subsidising less and less.
   
• Deprivation vs. Funding: Shockingly, the areas with the highest levels of poverty - those that need local services the most - have often seen the deepest cuts to their grants.
   

• Outdated Taxation: We are still using a Council Tax system which bears little relation to actual local need or demand for services.

   

Our Plan to Save Local Services

We cannot afford to let our councils fail. The Liberal Democrats are calling on the Government to move past emergency bailouts and deliver a sustainable future for local government:

• Real-Term Funding Increases: A sustained increase in core funding to help councils keep pace with inflation and a growing, ageing population.
   
• Fixing the SEND Deficit: A dedicated, long-term funding solution for the high-needs education deficits that are currently bankrupting school budgets.
   
• A Fair Funding Review: Implementing a needs-based system that ensures money goes where it is needed most, with full protections so no council faces destabilising year-on-year losses.
   
• A Comprehensive Review: Fully review how we fund local government to ensure a fair, sustainable, multi-year settlement that allows councils to properly plan for the future.