- Conference
- 2024 Local Government Service Group Conference
- Date
- 1 January 2024
- Decision
- Carried
Conference is appalled at the ongoing funding crisis in local government, which is now resulting in an existential threat to the future of many councils across the UK.
Conference condemns the actions of successive Conservative Governments over the last decade that has resulted in local authorities facing an existential crisis.
For years, UNISON and the Local Government Association have been calling for a sustainable long term funding settlement and updated distribution mechanism to allow councils to actively support their communities.
Instead, councils are having to contend with single year settlements when trying to make medium and long-term spending decisions and the ‘fair funding’ review of local government – promised since 2016 – continues to be kicked further into the long grass.
Extensive UNISON research from last autumn revealed that councils across the UK were facing a funding shortfall of £3.56bn in 2024/25 and a cumulative funding gap of just over £7bn for 2025/26. On a regional basis, Scottish councils collectively faced the largest funding gap per head of population at £121, followed by Cymru/Wales at £112 per person. A combination of extreme levels of funding cuts from central government and growing demand for a range of services are the heart of this seemingly never-ending crisis. Well over 30 councils from across England, Wales and Scotland have indicated that they are getting worryingly close to declaring effective bankruptcy. This is on top of the growing number of councils that have recently issued section 114 such as Nottingham and Birmingham.
According to the Institute for Government, local council ‘spending power’ in England – the amount of money authorities have available to spend from government grants, council tax and business rates – fell by 17.5% between 2009/10 and 2019/20, before partially recovering. However, in 2021/22 it was still 10.2% below 2009/10 levels. The fall in spending power is largely because of reductions in central government grants. These grants were cut by 40% in real terms between 2009/10 and 2019/20, from £46.5bn to £28.0bn (2023/24 prices). This downward trend was reversed in 2020/21 and 2021/22 as central government made more grant funding available to local government in response to the pressures of the pandemic. Even including Covid grants, the fall in grant income was still 21% in real terms between 2009/10 and 2021/22; without, the fall was 31%.
Councils in Cymru/Wales were collectively facing budget pressures that required an extra £720m for the financial year 2024/25 just to stand still, whereas in Scottish councils collectively reported that they needed an extra £932m on top of last year’s financial settlement in order to provide the same levels of service in 2024/25.
Conference notes that despite government propaganda local government funding remains completely insufficient. The Levelling Up, Housing and Communities Committee published a report estimating a funding gap of £4bn over the next two years. Other estimates suggest £7bn is required to restore funding to 2010 levels. Multiple local authorities have issued Section 114 notices and many more are on the verge of doing so. Even more local authorities have announced huge levels of cuts in expenditure to ensure a balanced budget.
This situation was not inevitable, rather Conference believes this is a direct result of 14 years of misguided government policy towards local government. The areas of greatest need and those with the highest levels of deprivation have generally suffered the worst from cuts to funding.
Conference further notes that central government no longer provides additional funding for areas where there are a higher than average number of disabled people. This leads to additional cost pressures on social care. The 2% precept the government expect councils to add to council tax bills to fund adult social care not only falls woefully short of funding the additional resources needed to deliver good quality and reliable social care for older and disabled people, but, in that council tax is a regressive tax, also penalises those on the lowest incomes, who are often the people who are most likely to use these services.
Additionally, the move away from a central funding formula to councils relying on business rates puts councils in the most deprived areas of the country at a substantial disadvantage. Councils are seeing any potential income from business rates falling year on year as more and more businesses close due to the disastrous economic management of a Tory government that has overseen the worst cost of living crisis in living memory. While affluent Tory strongholds may thrive as a result of this policy, more deprived areas, which invariably have higher numbers of disabled people, suffer.
Every year the crisis in local government finance impacts on the services we provide, leading to withdrawal of services and outsourcing. Staff have seen terms and conditions deteriorate, withdrawals from LGPS pension schemes, redundancies. Workloads, stress and burn-out all increase.
Conservative and coalition rule from Westminster reduced funding for local authorities in England by over 10% between 2009/10 and 2021/22 at the same time demand for services such as children’s and adult care have increased both due to austerity and an ageing population, inflation has added further costs and the priorities for local government have increased.
In Autumn 2023 it was reported that county councils in England would face a total of £4bn funding deficit over three years.
Removal of proper grant funding has led to council’s investing or borrowing to provide services. UK council’s borrowing has increased to a combined £97.8bn, equivalent to around £1,400 per person.
Government has failed to provide funding for equal pay and its own National Living Wage, (the additional costs to keep up with the NLW to county councils is over £230m) and the government fails to recognise any differential impact of its reduced spend on local government on any groups that share a particular protected characteristic.
An increased number of councils have reported to government that their expenditure is about to exceed their income by issuing a 114 notice under the Local Government Finance Act 1988 – indicating they are effectively bankrupt.
Fourteen councils have issued section 114 notices since the Local Government Finance Act 1988 became law. Hillingdon and Hackney councils were the first and second to do so, in 2000. In 2018 Northamptonshire issued two notices, since then seven councils have issued another ten notices.
Conference believes the latest last-minute £600 million uplift represents little more than sticking plaster by a government panicked by several councils going bankrupt before the general election. The amount on offer barely scratches the surface and does not sufficiently deal with spiralling social care costs (such as child social care, which is up by 36% per person since 2010-11). The Local Government Association has argued a figure closer to £1.6bn was required to plug the funding gap.
In the Northern Region, Durham County Council’s allocation of the £600 million for 2024-25 will be £5.880 million. This will only reduce the amount of reserves they are using for 2024-25 to £3.720 million. The base budget pressures for this local authority in 2024-25 are a staggering £51.797 million.
The Institute for Government Figures show that, even with the additional funding, the core money available to councils will remain 10% lower than in 2010-11. The situation is simply unsustainable.
In response to the dire funding situation, councils face difficult decisions around increasing council tax as it is a regressive levy, disproportionately impacting on lower income households. According to recent calculations by the IFS for 2019, council tax bills for the poorest 10% in England accounted for one tenth of take-home pay. For the richest 10%, it was just one-fiftieth. During a cost-of-living crisis raising council tax therefore increases the burden on some of the most vulnerable.
Conference is clear that our ambition for the future of council funding cannot just be limited to dealing with the immediate funding gaps that councils are facing for the coming years. UNISON has been documenting the damage to services that years of savage funding cuts have created, and the results are shocking. The number of public libraries directly provided by local councils from 2010 to 2023 has fallen by 1,376 (a 35% reduction) whilst 1,219 youth centres have closed in the same time period. Alongside this, over 1,400 children centres have closed in the same period.
Conference notes that there will shortly be a general election. The Labour Party has stated they will move to multi-year funding settlements for local government and ensure funding is directed to areas that most need it. There are no assurances from the Labour Party regarding increasing funding to local government. Conference does not believe that multi-year under funded settlements are enough.
Whilst these problems cannot be reversed overnight, the damage that has been done to local government in terms of job losses and service cuts cannot be forgotten and must be reversed. Conference supports the call for massive re-investment in local government from the centre, along with longer term and fairer funding models. We also continue to support a positive vision for local government which recognises the fantastic work local government staff do and roots local public services in an ethos of democracy, equality and public ownership.
Conference believes that money to properly fund local government can be found. Fairer taxation of wealth could generate billions of pounds each year, for example taxing capital gains tax at the same rates as income tax could generate £12bn-16bn a year.
Conference notes that there is enough wealth in society to redress the funding shortfall. Globally, there are more billionaires than ever before. The world’s richest person, Bernard Arnault who owns the majority holding of LVMH, has an estimated fortune of $233 billion, up 10% from last year.
This is replicated in the UK, where the 10 richest people have a combined fortune of £207.8 billion. The FTSE 100 companies made over £250 billion of which £85 billion was paid in Dividends to Shareholder in 2023. We further note there appears to be little action to recover £10 billion fraudulently claimed from the COVID Recovery Fund. Had the wealthy been properly taxed over the last three decades, then there would be funding for our public services.
In particular, as we approach a general election and the likelihood of a Labour government, the campaign to increase taxing the rich and using the increase in public funds for council services is imperative.
Conference notes the collective efforts of UNISON to highlight the issue of the underfunding of local government. Conference believes the reality of the last 14 years is the government were not remotely interested in listening to UNISON’s arguments despite having the power to fairly fund local government as was evidenced in January 2024 when some last-minute lobbying by Conservative MPs resulted in a further £600m in addition to the funding outlined in the provisional local government settlement for 2024/25.
Conferences welcomes UNISON’s continuing campaign on local government funding over the last year, including: our council cuts website, which once again led to thousands of emails being sent by UNISON members to national politicians across the UK calling for more funding, alongside our widespread lobbying work. UNISON worked productively with outside bodies including SIGOMA in demanding more council funding and directly lobbied politicians throughout the year. Meanwhile, direct support was provided to branches whose councils were facing extreme financial challenges and high-quality local council finance training was again made available to activists across the UK. All this work should continue, working with other campaigning organisations when appropriate.
It is imperative that UNISON do not ease off on our calls for increased and fairer funding for local government. If anything, Conference believes we should increase our lobbying of politicians especially in the event of a Labour general election victory.
Conference believes we need a national plan to support those branches where underfunding has led to financial crisis and calls upon the Service Group Executive to:
1) Further strengthen the campaign against cuts to local government funding and make the case for sufficient, fair, long-term funding – Continue to campaign strongly for proper recognition of local government services, calling for the investment needed to provide services and safeguard jobs, an end to the austerity politics which cause cuts to services, job and pay, and for local government funding to be significantly increased alongside a fairer system for distributing the funds and longer term settlements;
2) Work with politicians at all levels to get them to take effective action to end cuts to local government services. Develop a lobbying strategy aimed at influencing politicians locally, regionally and nationally, including exploring the possibility of holding a national lobby of parliament or demonstration alongside other unions;
3) Generate a range of political activity in parliaments across the UK calling for more funding for council services, working with Labour Link to impress upon the need for any future Labour Government in Westminster to look to rebuild the important range of public services that councils provide back towards 2010 levels;
4) Joint lobbying at the Chancellor’s budget, during consultations on local government finance and at other opportunities with sister unions to increase funding of local government;
5) Develop a clear plan of support, advice and solidarity to any branches dealing with a section 114 notice; and work closely with branches that are likely to issue or have issued section 114 Notices to assist them to build broad public campaigns for extra funding;
6) Work alongside the Labour Link to lobby Labour to commit to increased financing for local government, based on the needs of our members;
7) Work with UNISON’s Labour Link, in the event of a future Labour Government, to lobby for;
a) emergency funding for local government to address the immediate funding gap,
b) restoration of local government funding in real terms to 2010 levels; and
c) a return to a centralised funding formula that does not rely on local business rates but instead takes into account the different cost pressures councils face including where there are a higher than average numbers of disabled people relying on social care.
d) increased and fairer funding of local government based on UNISON’s existing policy positions.
8) Work with UNISON’s policy team, devolved regions and external key allies like the TUC to articulate how council funding should be reformed in order to make it fairer, as part of the ongoing work on developing a positive vision for the future of local government;
9) Raise awareness about the importance and contribution of local government workers to our society through a series of high-profile campaign actions (for example the Local Service Champions campaign) and provide opportunities for UNISON members and members of the public to lobby for more council funding;
10) Continue to raise support amongst the general public by putting across the damaging human consequences of cuts to services alongside demonstrating the value of all local government services;
11) Continue to raise the profile of local government workers with initiatives such as ‘Local Government Champions’ to promote the importance of considering a career within local government to the next generation of local government workers;
12) Conduct a further Freedom of Information request and use the data to update the Council Cuts website to illustrate the scale of the funding gap faced by councils across the UK and encourage people to lobby national politicians for more council funding; continue to utilise Freedom of Information requests to update the Council Cuts website to support lobbying activity;
13) Produce a detailed summary of cuts across the UK since 2010, with data on the level of cuts, highlighting key services that have experienced cuts, and a section on the victories that have been won in defeating cuts or bringing services back in-house, saving jobs and services;
14) Continue to provide high quality local government finance training to help branches across the UK to understand, interrogate and influence their local council’s budgetary process; make further training available to activists on local government funding and challenging council budgets;
15) Where possible, co-ordinate those branches that have balloted members and take lawful industrial action, in line with all relevant legislation and UNISON rules, in response to the impact of fundings cuts, for example job losses or cuts to terms and conditions, so as to bring campaigns together and increase members’ collective strength.
16) Seek to ensure that increased support is available for branches and our members in councils, who are likely to face urgent cuts which are often devastating to branch committees.
Local Government Service Group Executive (Motion 25)
Birmingham UNISON Branch (Amendment 25.1)
Camden UNISON (Amendment 25.2)
Northern Region (Motion 26)
Eastern Region (Motion 27)
North West Region (Motion 29)
National Disabled Members Committee (Amendment 29.1)