Comment
COMMENT
The Funding Issues faced by Local Authorities
Mark Edgerley of Boyer comments on the impact of the proposed Infrastructure Levy T
he news in September 2023 that Birmingham City Council (‘Europe’s largest local authority’) had been forced to issue a Section 114 notice sent out a message that resonated far beyond the West Midlands: that
local authority financing was in serious trouble. Birmingham’s finances were shown to reveal a projected gap of £87m between
income and expenditure for the 2024/25 financial year and the Section 114 notice (a reference to the section of Local Government Finance Act 1988) effectively declared bankruptcy. Birmingham can no longer afford to service the significant debt that it owes and it is clear that the businesses that it had created to generate financial security had not only failed to do so, but contributed to its financial downfall. Sadly this is not uncommon. In November 2023 the County Councils
Network and Society of County Treasurers conducted a survey of 41 of county and unitary authorities which found that 10% are not confident that they can balance their budget in 2023. Te figure increased to 40% in 2024 and 60% in 2025, due to a combination of stubbornly high inflation, rising demand and ‘broken’ provider markets for children in care. Tis is despite councils planning to make over £2bn worth of ‘challenging’ savings and service cuts over the three-year period. Furthermore, in June 2023 the Chartered Institute of Housing warned that 44% of local authorities were reducing housing programmes, while a quarter
www.housingmmonline.co.uk | HMMFebruary/March 2024 | 25
had already halted development – with a devastating impact on the supply of social and affordable housing. Many local authorities are also opting to dispose of failing commercial
property investments, with some even selling their own workspaces. Kent County Council put the county hall in Maidstone up for sale and prior to that Wakefield Council had temporarily closed its county hall in a bid to save on rising energy costs.
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