The present cost of living crisis has become the dominant issue facing households across the country. Colleagues in the sector are stepping up their efforts to support those who are the most vulnerable – and many more who will be impacted.
In recent weeks there has been an increasing focus on the impact of the inflationary crisis, not just on people but on businesses, with costs rising across the board. The same applies to local government, where rising costs could lead to some particularly difficult challenges for budgets this year and next.
Research by the County Councils' Network (CCN) in June found the costs of inflation for our member councils in 2022-23 has risen by an estimated 92% since they set their budgets in February. The survey projected those councils had £1.5bn in extra revenue and capital costs, with the Local Government Association similarly estimating a £2.4bn cost for the entire sector. Both figures were based on inflation at the time.
Even before this, the extra funding from last year's Spending Review was already eaten up by pre-existing inflation and demand pressures. Faced with rapidly rising revenue and capital costs, not least in roads maintenance, adult social care, and energy, CCN estimates at least £730m of additional costs this year are unfunded for our member councils – a number that will only rise as inflation peaks.
Under the previous Government's Spending Review, the next two financial years for local government were set to be ‘cash flat'. This presented a challenge then. Now circumstances are radically different.
Local public services will have an essential role over the coming period in supporting residents and businesses through the cost of living crisis. The level of support councils can offer to residents is directly influenced by the level of support they receive from the centre.
With the announcement of Liz Truss as the new Prime Minister, an emergency budget and Spending Review in the autumn is highly likely to follow. CCN, alongside others, will be making the strongest case possible to ensure that local government is adequately funded through what is going to be an extremely difficult period.
James Maker is director of policy and communications at the County Councils' Network
@CCNOffice
