Financial challenges
For a long time, we have been open and transparent that Coventry City Council - like many other local authorities of all political colours across the country - are facing severe financial challenges. These challenges have been caused by the collective result of severe cuts in funding, rising demand for services such as social care and homelessness, and the more recent impact of inflationary pressures.
Funding issues
Since 2010, Local Government funding has been significantly reduced. Councils everywhere have had less money to deliver services.
For example, in Coventry our core spending power has fallen in real terms by £1.6bn or an average of £100m every year.
Although this is a issue for all Councils, Coventry has been doubly disadvantaged as we receive one of the lowest funding per head of the population in the West Midlands and the country.
To give you the numbers, our 25/26 core spending power is £1,130 per person. That figure is £46 less than the national average. If we were funded at the national average, then we'd have £17 million more a year.
Funding takes no account of population growth, yet Coventry is amongst the top 10 for growth since 2010. In other words, without any extra funding, our consistently increasing population means our money is having to stretch further than other councils.
Demand on services
Although there has been some increase in funding over the last two years, these increases have not kept pace with inflation and do not sufficiently reflect the increase we've seen in demand.
In 2010, we spent 52 per cent of our budget in three areas.
- children's social care
- adult social care
- housing and homelessness
Because funding is not based on need and hasn't kept up with demand or inflation, we now must spend over 83 per cent of our net budget on these three services. This leaves just 17 per cent to spend everywhere else.
We continue to make internal efficiencies but despite this we have had to make savings. Without making these, the reality is that we will not be able to set balanced budgets in the future and will eventually run out of reserves to fill the gap.
No action would mean that we would be forced to issue a Section 114 notice in the next few years, effectively meaning we would be bankrupt.
Future
We have been lobbying the government to look at the way it funds Local Authorities, and we have written to the Secretary of State for Levelling Up, Housing and Communities of the United Kingdom.
The government have promised a full review of spending and have indicated that they will give local authority a three year deal going forwards. This would give local authorities more security.