The pressures facing UK councils

What are the main pressures impacting local councils?

Local authorities across the UK are facing significant challenges. With the last Budget offering no respite and the lack of any long-term solution for the sector's sustainability, councils need to redouble their efforts to keep their heads above water. Our latest research has highlighted the significant pressures the sector is facing.

Spending power not keeping pace with demand

Over the five-year period from 2018-19 to 2022-23, core spending power has only increased by 4% nationally, while council spending has increased by double that figure at 8%. The pressures on demand-led services such as social care, driven by population growth and an ageing demographic, have further increased the pressure on council spending.

Social care costs driving up council spending

All regions have experienced an increase in the cost of social care, with the North seeing the highest increase of 15% compared to 13% in the Midlands, 12% in the South, and 6% in London. Adult social care has experienced a real-term cost increase of 9% over the same period, with Yorkshire & Humber and the South East seeing the highest increases of 14% and 12%, respectively. Meanwhile, children's social care has experienced an even more significant real-term cost increase of 18%, with the North and Midlands seeing the highest increase of 22%.

Cuts to discretionary services impacting local communities

With spending power not keeping pace with demand and costs increasing in key front-line services such as social care, many councils have needed to divert funding from other areas. This has led to cuts being made to spend on discretionary services that have a direct impact on local communities and quality of life, such as libraries, street cleaning, and maintaining civic spaces such as parks and playgrounds.

Increasing reliance on reserves

Many councils are having to bridge the gap between available spending power and increasing demand by turning to their reserves. However, the financial safety net of £23 billion in reserves held collectively by local authorities in England is not evenly distributed. The councils most at risk of financial failure often have the least access to these reserves, exacerbating the risk of financial collapse and the subsequent impact on local communities.

One in five councils at risk of financial failure

By the end of the year, over one in five councils in England will be at risk of financial failure without additional income or further spending cuts. Metropolitan Boroughs and Unitary authorities are the most at risk, with Metropolitan Boroughs having the highest risk of failure at 39%, followed by Unitary authorities at 42%. By 2028/29, our research projects that two in five councils (41%) will be at risk of financial failure. The North East (58%) and Yorkshire and The Humber (57%) will have the highest percentages of authorities at risk, while the East of England (30%) and South East (34%) will have the lowest percentages.

Percentage of councils at risk by region

Investing in change is crucial for councils' future success

Investing in change programmes is crucial for councils' future success. By making active interventions, councils can reduce their cost base and manage demand, achieving a more financially sustainable future. Investing in long-term resources, short-term capacity boosts, new technology, or project management resources can help councils achieve their goals and achieve a return-on-investment ratio of between 3 and 5:1.

By working with experts in the field, councils can tailor their investment strategies to their local context, enabling them to become masters of their own destiny and secure a sustainable future for their communities.

Creating a blueprint for change for Stoke-on-Trent