Coventry Council call on Minister to take action over 'financial crisis'
Councillor Richard Brown's written to Michael Gove.
Last updated 24th Aug 2023
A leading city councillor has sent a letter to Westminster, calling for urgent action to help local authorities cope with a funding shortage that threatens the care and support they offer to local residents.
The letter to Michael Gove MP, Secretary of State for Levelling Up, Housing and Communities, tells of the ‘unprecedented times’ being faced by Coventry City Council.
Cllr Richard Brown, Cabinet Member for Finances, tells the Minister that despite many years of strong financial management to keep within budgets, the Council is this year facing a multi-million pound deficit.
This has mainly been caused by an increased demand for adult and children’s social care, demand for housing, and wider inflationary pressures.
He tells Mr Gove that since 2010, Coventry has received £120m less each year – equivalent to real terms cut in core spending power of £678 per household over the past 14 years.
That is a much bigger cut than the England average of £581.
The funding shortage is despite analysis showing that the Council is amongst the 30 worst funded local authorities in the country in terms of core spending power and lies just outside the most deprived quartile of local authorities in the country – at 81st out of 317.
In the letter Cllr Brown states: “I write to you today as local government stands on the precipice of financial disaster.
“I am sure you are fully briefed on the dire financial situation facing local authorities across England – but I would like to draw your attention to the devastating impact this will have on a well-run authority like Coventry City Council.
“This year, and despite significant management actions to reduce spend, Coventry City Council still faces in-year pressures of around £12m, rising to a deficit of over £30m for the next financial year.
“We have always responded with prudent investments, robust management, and innovation in service delivery – maintaining a balanced position in recent years. However, like others in the sector, shortages in government funding mean we can no longer keep pace with demand.”
In the letter, Cllr Brown calls on the Government to take urgent action to help the city cope with the costs of social care, or it will be forced to make cuts in other areas and be unable to deliver the services needed by the people of the city.
He says: “Unfortunately, the proposed one-off funding guarantee to ensure at least a 3% increase in core spending power is nowhere near sufficient to meet inflationary pressures and cope with the rise in social care costs.
“The escalating costs of placements – for children and adults – reflect a market that is broken, where local authorities are forced to cut other budgets to respond to this statutory demand. This position presents a clear and present danger to the ability of councils like Coventry to deliver their core functions.”
In the letter Cllr Brown also highlights a recent Institute of Fiscal Studies research report, and the exceptional circumstances Coventry faces: “The August 2023 report by the Institute of Fiscal Studies (How much public spending does each area receive?) points to the disparities of funding across the country, where Coventry is flagged as an area that has been significantly underfunded across multiple public services.”
Cllr Brown points out that comparing local government funding in the report for Coventry City Council with the assessed relative need, shows a shortfall of circa £50m.
He calls for a discussion between the Council and Government, and also invites the Secretary of State to visit the city and hear the Council’s case in person.
He writes: “Whilst we believe that this situation can only be mitigated by long-term funding reform, in the short-term we are calling on your department to assist.
“We would welcome a discussion on potential measures to help top ups for under-funded authorities like ours, or fairer funding in relation to social care and housing.
“I would urge you to come and visit us in Coventry – so we can explain our situation more fully and elaborate on the catastrophic impact that our funding shortage will have on services for some of our most vulnerable residents.”