It has been many years since Councils have felt they had enough funding to provide the services that their residents need. For most of this century they have been cutting many non-essential and non-statutory services, such as youth clubs, and they have been outsourcing some essential services to cheaper and, in some cases, inexperienced and inadequate providers. And the cuts have happened year on year, so what seems unthinkable one year becomes a reality the next.

The core Council services are around housing and social care, for adults and children, plus a number of environmental services such as recycling and waste collection. Social care supports the most vulnerable, from essential care for the elderly and those with disabilities, to support for families in crisis and providing for looked after children. Most Councils also support an active volunteer sector with its increasing provision of food banks, as sure indicator that all is not well with society.

Throughout all this the Westminster government has been adding extra responsibilities to local government, but not the funding needed to meet them, all the while passing the blame onto Councils.

Councils get the bulk of their income from Council tax, business rates and central Government grants. The latter consists of the main revenue support grant, plus ring-fenced grants which simply pass through the Councils accounts and directly out to recipients, such as housing benefits and school funding. The formula for allocating the revenue support grant is shrouded in mystery, but seems to be based on historical assessments of need rather than current need.  It has also reduced on average by 50% in recent years, and some Councils get precisely zero in revenue support.

Council tax itself presents many problems for Councils trying to balance the books. It is only a progressive tax up to a certain level. Owners of properties in the highest tax band H, which could be worth millions, pay just double the tax of those on the median band D. So the presence of very expensive homes does not mean substantially higher income for the Council. And yet they are often cited as the reason for the small or non-existent revenue support grant. So we have the apparent anomaly in Kingston, where I live, where the Council is one of the lowest spending Councils per capita in London but has the highest Council tax rate (and receives zero revenue support grant) – try explaining that on the doorstep.

The increase in the amount that can be raised from Council tax is often capped by Government, reducing the Council’s ability to raise sufficient funds. However most would be reluctant to raise Council Tax by much more than the cap, if they were allowed, because they know what the impact will be on low-income residents.

Many Councils have been raiding their reserves, which are in place in case of emergencies such as a pandemic, but not to shore up regular spending needs. Others have been looking at marginal sources of income, such as parking charges, although this can have unintended consequences if retail footfall suffers as a result.

So Councils have been squeezed very hard for many years. Indeed some have been very close to bankruptcy. The Local Government Association has just released a report which shows that Councils in England face a collective shortfall of £2.4bn this year. On top of the year-on-year cuts in real terms they are now having to factor in general increases in the cost of living and huge rises in energy prices.

It seems that 88% of all Councils are planning to uses reserves this year to meet the extra costs.  Last week two Tory-run Councils warned Rishi Sunak that they are facing bankruptcy and that raising the cap on Council tax will not solve the problem.

The LGA has just launched its #SaveLocalServices campaign arguing that reserves should not be used to fund budget gaps.

Cllr James Jamieson, the Chair of the LGA is quoted as saying:

Local government remains the fabric of our country but many of the vital services we provide face an existential crisis. Inflation is not going to come down overnight; reserves can only be spent once and a local service cannot be cut twice.

Rising demand for services – and the extra costs to provide them – means that even having the same funding next year as they had this year would leave councils having to make significant cuts to services, such as care for older and disabled people, protecting children, homelessness prevention, leisure centres and bin collections.

* Mary Reid is a contributing editor on Lib Dem Voice. She was a councillor in Kingston upon Thames, where she is still very active with the local party, and is the Hon President of Kingston Lib Dems.