{"id":299815,"date":"2025-06-18T01:20:53","date_gmt":"2025-06-18T01:20:53","guid":{"rendered":"https:\/\/peraltafinancing.com\/uncategorized\/over-half-of-english-councils-face-insolvency-under-5bn-deficit-mps-warn-local-government\/"},"modified":"2025-06-18T01:20:53","modified_gmt":"2025-06-18T01:20:53","slug":"over-half-of-english-councils-face-insolvency-under-5bn-deficit-mps-warn-local-government","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=299815","title":{"rendered":"Over half of English councils face insolvency under \u00a35bn deficit, MPs warn | Local government"},"content":{"rendered":"


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Councils in England face being overwhelmed by billions of pounds in debts and reforms that are divorced from reality, according to an influential committee of MPs.<\/p>\n

In its inquiry into local government finances, the public accounts committee (PAC) told the Treasury and other departments to urgently address the estimated \u00a35bn deficit on high needs spending \u2013 mainly on special educational needs \u2013 that will hit council balance sheets at the end of the financial year, potentially driving many insolvent.<\/p>\n

Sir Geoffrey Clifton-Brown, the PAC\u2019s chair, said: \u201cOur inquiry heard that the government is concerned about local authority finances. But the lack of urgent action to come forward with a plan to address the fast-approaching cliff edge for under-pressure authorities would seem to suggest it is comfortable with the current state of affairs as normalised background noise.<\/p>\n

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\u201cAlarmingly, scrutiny of council finances can now provoke a sense of deja vu, with the same unfixed issues seen over and over.\u201d<\/p>\n

Since 2021 councils have been able to keep high needs deficits off their balance sheets through a \u201cstatutory override\u201d granted by the previous government. But the accounting manoeuvre expires in March 2026, the end of the current financial year.<\/p>\n

The inquiry said that the Ministry of Housing, Communities and Local Government, the Treasury and the Department for Education \u201cshould work together to set out their solution for ensuring local authorities can achieve a sustainable financial position when the statutory override ends in March 2026. The solution must include how cumulative deficits will be treated.\u201d<\/p>\n

Louise Gittins, chair of the Local Government Association, which represents councils, said: \u201cWe expect the government to provide urgent clarity on how it plans to address high needs deficits, which are projected to rise to \u00a35bn next year, as part of its forthcoming special educational needs and disabilities reforms.<\/p>\n

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\u201cOver half of councils have warned us they will become insolvent next year when the statutory override flexibility ends and we continue to urge the government to write off these deficits.\u201d<\/p>\n

The committee also accused the government of creating \u201csignificant uncertainty\u201d over a string of promised reforms and reorganisations, including for funding, special needs provision and social care.<\/p>\n

Clifton-Brown said: \u201cAspirations for wide-ranging reforms seem to be unengaged with a reality in which local authorities do not have good and strong capacity to fundamentally change the way they work.\u201d<\/p>\n

But Jim McMahon, minister of state for local government, said: \u201cThese claims are not supported by the evidence. From a standing start we have set out a clear plan to fix the foundations of local government and have wasted no time in taking action as part of our plan for change.<\/p>\n

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