Councils in the North most at risk amid warnings that 127 could fail financially in next five years

Analysis shared exclusively with ITV News has laid bare the scale of the funding crisis for councils and exposed large regional divides in budgets and spending

Councils across the North of England are almost twice as likely to fail financially within the next year as those in the South - according to an exclusive analysis for ITV News.

It reveals that 30% of northern Councils could be at risk of financial failure during the next 12 months - with 55% at risk within five years.

That compares to 17% in the first year for those in the South of England, rising to 35% within five years, according to the research by Grant Thornton, published a week before the Chancellor Jeremy Hunt announces his latest budget.

Altogether the study suggests that 127 councils in England - out of a total of 313 - could face financial failure before the end of the decade.

ITV News' Deputy Political Editor Anushka Asthana takes us through the analysis

The study paints a bleak picture for local government - in which demand for services is far outstripping levels of funding across the country, leaving more and more councils facing the prospect of a black hole.

The report also finds that the pressures are most intense in urban areas - covered by unitary and metropolitan councils that provide all services to residents, including housing, adult social care and children services.

And it suggests the squeeze on councils remains, despite an additional £600m injection of cash from government this year. That money has been welcomed by many in the local government sector, but figures tell me that it is still a sticking plaster, with much bigger, long-term reforms needed to stem the funding crisis faces councils.

It comes as the Local Government Association publishes two surveys - one carried out in January this year, and then a second in February following the announcement of extra cash.

It finds that despite the additional funding, the vast majority of councils (85%) are still anticipating the need to make cost savings to set their budgets - with seven out of 10 dipping into their reserves.

Almost 100 chief executives have highlighted areas such as sport and leisure provision, parks and green spaces, and the provision of museums, galleries and theatres being picked out for cost savings.

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That echoes the findings of the Grant Thornton study - that dives into the data to reveal how money is being diverted from "discretionary" cultural services - as well as roads and transport - towards adult social care and children services, which councils are required by law to deliver.

Even with the cuts, it reveals just how precarious the situation is for councils - after Birmingham City Council, Thurrock, Croydon and Slough issued section 114 notices - effectively declaring bankruptcy and forcing them to slash all non essential spending.

The authors define financial failure as a council's reserves falling to below 5% of their net revenue expenditure - and find that 41% of local authorities in England will find themselves in that position by 2028/29 if urgent action is not taken.

Delving into specific services, the authors reveal a steep decline in real terms spending on libraries, falling 17% across the country. London has the biggest decline (27%) but also continues to have the highest per capital spending levels when it comes to libraries.

Chancellor of the Exchequer Jeremy Hunt. Credit: PA

The report reveals that Kensington and Chelsea Council spends £37 per head on libraries, the highest level in the country, followed by £28 in Camden and Hackney. At the other end of the scale is Cornwall spending just £3 a head, followed by Luton and Leicester, on £4.

There has also been a 4% reduction overall in street cleaning - but higher figures in parts of the country with a 17% decline in the West midlands and 10% in the South east. Once again, the absolute figures vary hugely from £133 per head in Westminster and £53 in Hackney to £1 in Crawley and £2 in Melton in the East Midlands.

A big factor in piling pressure on councils is the rising cost of adult social care, with a 9% real-terms increase in the five years from 2018/19 to 22/23, and an 18% increase in children's social care.

Overall, Grant Thornton suggest that 63 councils could face financial failure over the next year, rising to 127 councils over five years. In terms of raw numbers that equates to 33 in the Norther of England, 29 in the Midlands, 13 in London and 52 in the South. But proportionally - it is the north that looks set to be worst hit.

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