North East councils plead with next government to fix 'broken' system or risk more town halls going bust

Leaders in the North East have backed calls from the Local Government Association (LGA) pleading with all political parties to act on a predicted £6.2 billion financial black hole facing town halls across England.

In a new white paper, the LGA pleads with whoever wins the general election on July 4 to launch an urgent review into public service reform and deliver far greater certainty that prevents cash-strapped local authorities making further cuts to services like leisure centres, bin collections, and road repairs.

A number of councils, including Birmingham, has been forced to effectively declare bankruptcy already after reductions in government funding, spiralling demand for services like adult social care, and increasing costs.

The leader of Gateshead Council, Martin Gannon, said: “There are local authorities across the country of all different political persuasions that are effectively going bankrupt.

“It has been obvious for some time that the current model of funding local government is completely broken. It is dysfunctional and it does not work. And if something new and radical does not happen we will face a situation where the vast majority of local authorities will, within the next parliament, face similar problems.”

The LGA said it wanted the next government to commit to a “significant and sustained increase in funding”, alongside multi-year rather than 12-month financial settlements for councils and plans to reform the local government finance system.

Further proposals include giving councils greater power to build houses and reforms to ensure that adult and child care services are properly funded.

Northumberland Conservative party chair and deputy council leader Richard Wearmouth said: “We ask any incoming government to pursue a multi-year budget settlement with councils. That will help us to plan our finances in a prudent and informed fashion. We urge the next government, regardless of its politics, continues the current government’s programme of levelling up.”

Liberal Democrat Amanda Hopgood, who leads Durham County Council’s coalition administration, echoed the call for longer-term funding and said there are other measures a new government could take to help – such as providing help with the spiralling cost of home to school transport.