One in nine councils granted emergency support to balance books

One in nine councils with social services responsibilities are getting emergency government help to enable them to balance their books.

Ministers have agreed in principle almost £2bn in financial support overall for the 17 local authorities, with by far the biggest share going to Birmingham (£1.255.1bn), revealed the Department for Levelling Up, Housing and Communities (DLUHC) yesterday.

The support comes in the form of so-called capitalisation, under which councils can use borrowing or the sale of their assets to fund day-to-day expenditure, something that is usually prohibited.

Birmingham’s £367m savings plan

Birmingham’s ruling cabinet this week agreed a £367m two-year savings plan designed to help it balance its budget by 2026, as required by its DLUHC-appointed commissioners.

The proposals include £76m in adult social care savings and a £19m reduction in the council’s contract with Birmingham Children’s Trust, which provides children’s social care in the city.

However, due to inflationary and demand pressures, year on year spending on both adults’ and children’s services will rise.

Section 114 notices

Besides Birmingham, the list of councils includes four others that have issued so-called section 114 notices since 2021: Thurrock (£68.6m), Nottingham (£66.1m), Croydon (£47.4m) and Slough (£23m).

The notices are an admission that the council is unable to balance their budgets and are typically followed by the government sending in troubleshooters to oversee swingeing savings programmes, such as in Birmingham.

After Birmingham, the next biggest recipient of support is Bradford council, which will receive £80m for 2023-24 and £140m for 2024-25 in capitalisation support.

The authority said this meant it would be able to balance its budget in both of these years.

Social care demand causing ‘extremely challenging’ situation

However, council leader Susan Hinchcliffe warned: “This is not free money; it has to be paid back.  And like all councils, we still face extremely challenging financial headwinds over the next few years, primarily due to rising demand in social care. The difficult decisions have not gone away.”

As in Birmingham, the city’s children’s services are delivered by an external provider, Bradford Children and Families Trust, whose chair, Eileen Milner, said: “This is positive news for both the council and the trust, although we acknowledge that there are many challenges ahead.

“The trust is a new organisation, but we have a clear plan in place to continue to make improvements in the services we provide for children and families in Bradford and, as we do so, to continue to drive down costs.”

Councils receiving emergency support

The other authorities receiving capitalisation support are:

• Cheshire East (£17.6m)
• Cumberland (£41.2m)
• Havering (£53.7m)
• Medway (£14.7m)
• Middlesbrough (£13.4m)
• North Northamptonshire (£3.9m)
• Plymouth (£72m)
• Somerset (£76.9m)
• Southampton (£121.6m)
• Stoke (£42.2m)
• West Northamptonshire (£6.6m)