Body which represents Bolton says councils need more funding to prevent bankruptcy

Councils need more funding to prevent bankruptcy, a body which represents local authorities across the country has advised.

The Special Interest Group of Metropolitan Authorities (Sigoma) represents 48 local authorities in some of England’s most deprived areas, including Bolton Council.

This upcoming financial year, 2024/25, councils will see an annual rise of 6%, but the association says it is 'not nearly enough to fix the financial situation councils find themselves in', and adds that they could be put at risk of bankruptcy.

The Government expects half of the total increase in spending power to come from residents through council tax rises, but Sigoma warned this 'regressive' approach is unrelated to local needs and will likely leave councils unable to balance their books.

A letter written by the association to PM Rishi Sunak said: "This additional funding will fall short of what is needed as budgetary pressures have grown beyond council tax bases and will mean councils are still forced into making savings and at risk of issuing a section 114 notice.

"Whilst we appreciate the difficult national financial position, council finances are on a knife edge.

"We hope there is still the opportunity for the Government to provide local authorities with more assistance, even at this late stage.

"The local government finance settlement is a last resort and must be used to stabilise council finances.

"Without this support, as we head into next year, the current proposals by the Government will see a surge of S114 notices."

Sigoma analysis identified a funding shortfall of at least £1.6 billion in children’s services, the biggest single pressure facing Sigoma members, with no new money allocated and restrictions applied to the social care grant limiting spending decisions in this area.

The letter said it is crucial that funding elements increased in line with inflation must be based on the consumer price index figure for September of 6.7%.

It also said the Government must instigate 'full equalisation' for council tax to ensure local authorities in poorer areas which raise less revenue are not disadvantaged and 'a postcode lottery doesn’t develop for care services'.

According to PA, the letter has been signed by council leaders, but it is unclear whether anyone from Bolton Council has signed it.

This comes after Nottingham City Council, another Sigoma member, issued its second declaration of effective bankruptcy last month.

The council has proposed cutting more than 500 jobs as it faces a £50 million budget gap in the next financial year.

A Department for Levelling Up, Housing and Communities spokesperson said: “We estimate that the upcoming Local Government Finance Settlement will make available approximately £64 billion to the sector, and expect that councils will see, on average, an above-inflation increase in the funding available to them next year.

“Councils are ultimately responsible for the management of their own finances, but we stand ready to talk to any council that is concerned about its financial position.”

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