'On the verge of collapse': Local government in crisis with bankruptcy fears across the UK

Leisure centres, parks, playgrounds and libraries are all at risk, as local councils across the country are facing a bankruptcy crisis, Anushka Asthana has this special report

Over the past few weeks I have travelled across England speaking to leaders in local government - from Maidstone and Gravesend, in Kent, to Stoke-on-Trent, in Staffordshire, and then Surrey Heath and Woking in Surrey.

Everywhere I went, whether it was Conservative voices, Labour ones or Lib Dems, the message was the same - that local government is in crisis.

The reality is that councils are on their knees financially and services everywhere are under threat. 

ITV News embarked on this project after revealing earlier this summer that huge councils across the country were being hit by massive equal pay bills.

This includes Birmingham, which admitted liabilities of up to £760m because of legal cases accusing it o discriminating against female staff.

These claims come on top of a decade in which local government finance has been stretched to the limit following spending cuts through austerity, changes to the funding formula and now inflation. 

It was that financial context that meant when Birmingham was hit by equal pay it basically toppled over, effectively declaring itself bankrupt by issuing a section 114. 

This forces the council to stop any non-essential spending, including lots of things that you or I might consider pretty critical like youth services, or leisure centres and libraries. 

Rishi Sunak accused the Labour administration in Birmingham of driving the council to bankruptcy, but the reality is a crisis that spans the country and all political colours.

'There is always a broader conversation of local government about the right amount of money that goes into it,' Lee Rowley tells ITV News

At the biggest Conservative council in the country, Kent County Council, the leader Roger Gough told me things were "unsustainable".

His deputy Peter Oakford, who is in charge of finances, painted an even bleaker picture.

"I think all of local government across the country is heading for a death spiral unless the issues around the funding of social care are resolved," he warned.

He said that 70% of the council's budget was now coping with spiraling demand for social care and children's services - leaving a diminishing pot for everything else.

For example the roads budget, was squeezed despite Kent suffering record potholes in freezing weather last year, he said.

Kent County Council Deputy Leader Peter Oakford. Credit: ITV News

And Kent is not a council where there have been questions about bad financial decisions.

The same is true to a large extent in Stoke-on-Trent. There, leader of the council Jane Ashworth admitted she can't promise they will balance the books next year.

They need to find £25 million and could be forced to issue a 114 notice. 

She criticised the old Tory administration (that was voted out in May) for a bad decision to build a car park costing £15m but said mainly this was a national problem. 

She warned that getting to that stage wasn't a help to a council. 

Stoke-on-Trent council leader Jane Ashworth Credit: ITV News

"In your stomach you tend to think that will sort it out. Well it doesn't," she said.

"All it does is limit your own spending powers. But as we're limiting our own spending powers anyway.

"It doesn't seem to be a particularly helpful device. It's not like it brings with it a sack of money.

"It doesn't bring any money at all - it just brings government commissioners telling you that you can't do what you weren't going to do in the first place."

Stoke-on-Trent suffers with deprivation, which means it has a lower ability to raise council tax and a higher social care need.

The council argues a change in funding means less money follows need. 

In Woking, where the borough council was accused of poor financial investments under the Tories, a new Lib Dem administration is looking at some dire cuts.

From parks and playgrounds, to closing public loos, the local swimming pool, and youth services, all these social services are being hit.

Next door is Surrey Heath, the backyard of Tory MP and levelling up secretary Michael Gove, whose job it is to make sure councils are operating effectively.

The Lib Dems accuse him of pushing their council to bankruptcy with a funding formula they feel is unfair to their much more affluent area.

There, they want to keep more of the business rates they raise. They don't think they will issue a 114 notice soon but believe it could happen in two years. 

When asked how many more councils could go bankrupt, Lee Rowley put the issue down to 'significant or local issues'

The problem is everywhere - 60 council leaders and chief execs across England have spoken anonymously to the Local Government Information unit - which has shared some findings with ITV News.

“It’s the worst it’s ever been,” says one.

Councils are reduced to a "blue light service" says another.

There are warnings "libraries are gone, GP surgeries are gone", and that they "can’t maintain roads and parks".

Another admits: “We are on the verge of collapse..."

Meanwhile new research from the IPPR shows that councils have sold off £15bn of public assets since 2010 because of the financial strain.

The top five include: Birmingham, City of London, Westminster, Southwark, and Camden.

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