Councils in England have warned they may be forced to make cuts to local services such as waste collection and park maintenance over the next two years to cope with reduced funding.
The District Council Network, which represents 168 local authorities, has forecast funding shortfalls of more than half a billion pounds in both of the next two financial years.
District councils are responsible for many basic council services, such as housing, parks and waste collection. But with state grants lagging behind inflation, local leaders have said jobs will have to be cut.
Research from the network predicts a total funding shortfall of £550m in 2023/4 and £610m in 2024/5.
Of the 79 councils surveyed, 84 per cent said they were likely to raise council tax next year by the maximum allowable amount. Half of councils – 52 per cent – said they did not expect to be able to balance their budgets in 2024/5 without drawing on reserves.
Eighty-three per cent of councils said that if they could not secure extra funding for the next financial year, they would have to cut cultural services. Seventy-seven percent could reduce community support and 74 percent to parks and green spaces.
Almost three-quarters said they would cut budgets for recreation in their communities and two-thirds would cut wider environmental services.
Forty-three per cent said waste collection services would have to be cut to cope with funding pressures.
Council leaders said the cost of tackling growing homelessness was eating into their dwindling budgets. Spending on temporary accommodation by council homelessness services in England rose to more than £1.7bn in the year to March, latest figures show.
The cost of renting bed and breakfasts as emergency accommodation for families has risen by a third compared to the previous year.
Councilor Elizabeth Dennis, from the District Council Network, said any further cuts to services would be “devastating”, adding that “the most vulnerable people will be hit hardest”.
He added: “Unless we get a realistic financial settlement and the financial freedoms to ensure we can raise extra money to undertake our work, councils have only a slim choice about which services to cut.
“We already expect councils to make savings of up to nine per cent of their budgets, where possible through efficiencies, but increasing savings can only be achieved through workforce cuts and service reductions.”
A spokesperson for the Department for Housing, Housing and Communities said: “We have made £5.1 billion of extra funding available to local authorities through the Local Government Finance Settlement, making almost £60 billion available for the sector – an increase of 9.4 per cent in cash terms 2022/23. We continue to monitor pressures across councils and are prepared to speak to any council concerned about their financial situation.
“Councils are ultimately responsible for managing their finances, but the Government has been clear that they should not be taking too much risk with taxpayers' money.”