Why is there silence on the crisis looming for councils?

The Institute for Fiscal Studies has warned of the looming crisis facing local authorities, and the worrying silence on the issue in the election campaign.

- SEAN O'GRADY

Some councils, such as Thurrock and Birmingham, have effectively gone bust. The concern now is that many more will find themselves in financial difficulties, while all will face what the Local Government Association calls a “chasm” between rising demands and stagnant or even declining real-terms revenues.

“Cuts to some council services are likely unless spending pressures abate, even with big increases in council tax and especially in more deprived areas,” the IFS said. “Councils in the most deprived areas, often Labour-controlled, are likely to face the most difficult funding situation.”

Will spending pressures abate?

No. The most acute pressures are coming from an ageing population with the need for adult social care, plus a rise in the number of children with special educational needs (Send). Local authorities are responsible for children and adult social care residential placements, special educational needs support and temporary accommodation for the homeless. As these demands must be met, the money left over for potholes, parks and libraries comes under extreme and unsustainable pressure. Under all three parties, central government has tended to ignore this, or even exacerbate it by starving councils of money.

What will happen to council tax bills?

The IFS calculates that if council tax increases by 5 per cent a year in the next parliament – in line with the maximum allowed over the past two years without a local referendum – the average band D annual rate would be around £600 higher in April 2029 than now. The real-terms increase in council tax bills (averaging just over 3 per cent a year with inflation at 2 per cent, would be the highest since the 2001–05 parliament when they averaged 6 per cent a year).