Council calls for more funding from the government

Gateshead Council leader Martin Gannon has said local authority funding needs to be overhauled

A council leader has called on the government to change how local authorities receive funding.

Gateshead Council's Martin Gannon warned that "huge numbers" of local authorities could go bust unless the "whole structure of local government finance" changed.

The council has made £179m worth of cuts since 2010 but still faces a shortfall of about £50m over the next five years.

Local government minister Jim McMahon said he was committed to ensuring councils had "the resources they need to provide decent public services".

About 75% of Gateshead Council's budget is now spent on providing social care and looking after vulnerable children, Mr Gannon said.

"Unless something changes, we will get to a situation where if we spend every single penny we have on adult social care and do nothing else, you would still not have enough," he said.

The Labour politician said he was confident Gateshead Council would not go bankrupt but would "look a lot different in three years' time" if the government did not provide local authorities with additional resources.

Raising money

Mr Gannon, who is also deputy North East mayor, called on Kier Starmer's government to end competitive bidding systems that pitted councils against each other for cash.

The process recently led Durham Council to spend more than £1m on failed bids to the Levelling Up Fund.

Mr Gannon also wants grant funding to be distributed on the basis of need and deprivation rather than population, according to the Local Democracy Reporting Service.

English councils face a funding gap of £6.2bn over the next two years and half of all town halls could go bankrupt by 2029, according to the Local Government Information Unit (LGIU).

Jonathan Carr-West, chief executive of the LGIU, said councils should be allowed to raise money and decide what to spend it on without intervention from Whitehall.

"Devolution offers enormous opportunity for regional growth and power, with localised decision making on transport, housing and health which must be delivered hand in glove between central and local government," he said.

Mr McMahon said councils had faced "significant budget pressures" and the government was preparing a spending review for December to address the issue.

He named demand for adult social care, children's services, and temporary housing as the main pressures on council budgets and the government's plans to build homes and fix social care services and the NHS would alleviate the problem.

"Fixing the wider system is really important because, in the end, a lot of pressure that's brought to councils is because they're the last line of defence," he said.

"But it's a whole system that needs to be repaired," Mr McMahon added.