CORNWALL Council’s deputy leader has written an open letter to the Government calling for more funding for local authorities.

David Harris, the portfolio holder for resources and deputy leader at the Conservative run council, has said that without further support, there is a prospect of Cornwall Council hitting the wall in the next three years.

In the letter, to Michael Gove MP, the secretary of state for Levelling Up, Housing and Communities, Cllr Harris warned that: “it is evident that Government intervention to avoid the financial abyss faced by the sector (local authorities) is now of critical importance and once again I implore you to take swift and decisive action to enhance the final Local Government Settlement while you still have the chance.”

He added that this was despite Cornwall Council being a financially well run authority, with a laser like focus on providing value for money; with Cllr Harris stating that without government intervention, more authorities could be forced to issue Section 114 notices, virtually declaring themselves bankrupt.

As well as calling for government intervention to address ‘years of chronic underfunding attributable to an archaic funding formula’, Cllr Harris called for Cornwall-specific support, namely: “I also ask that regulations relating to any exemptions to the Council Tax premium on second and empty homes are set out as a matter of urgency to enable the Council to give appropriate notice to property owners and allow for greater precision in our medium-term financial projections.”

The letter comes as it is revealed that Cornwall Council is currently in debt to the tune of over £700 million, with the figure presently standing at £716,627,000 in figures released by the BBC Shared Data Unit, representing £1,253 debt for every resident.

In total, the UK’s local authority debt combined stands at £97.8 billion.

Dear Secretary of State Response to the provisional Local Government Settlement

I am writing on behalf of Cornwall Council to once again amplify the calls made by the Local Government Association, the County Councils Network (CCN) and many others respected bodies expressing extreme disappointment with the provisional Local Government (LG) Settlement.

Given the financial position facing the sector worsens by the hour, never mind the day, I would implore you to consider the points made in our response to the provisional Settlement outlined below and inject additional and critical Government support to the final Settlement before it goes before Parliament.

By any independent measure, Cornwall Council is a well-run organisation with a laser like focus on providing value for money – noting our latest residents’ survey bucks the national trend with a further improvement in how residents view the organisation. Furthermore, our external auditor’s interim annual report for 2022/23 finds ‘no risks of significant weaknesses in our arrangements for securing economy, efficiency and effectiveness in the use of our resources’.

However, we are facing a triple whammy of challenges that have added interest rate increases and continuing high inflation rates to significantly increased post pandemic demand for services with this demand now broadening and escalating to unprecedented levels.

As a unitary council we stand alone in attempting to weather this financial and demand-led storm across a vast but sparsely populated geography which compounds the challenges – particularly in relation to home-to-school transport.

We are expending every financial sinew we can muster attempting to balance the books, including deploying a prudent level of reserves.

The reality is that without further financial support from the Government, I fear that the growing list of S114 notices being issued will start to include councils whose performance, measured by metrics published by Oflog, point to being efficient and well run.

I have been Portfolio Holder for Resources since the Conservative Group became the majority party in Cornwall Council in 2021 and I have seen how tightly our finances are run, but I have now almost reached the stage of throwing my hands in the air in despair. Whichever way we turn we see financial issues that are outside of our control.

What hurts the most is the people hardest hit by councils falling into the financial precipice are those in society already at the sharp end of the cost-of-living crisis, unquestionably resulting in further demands for emergency accommodation and children’s social care, thus making it even more difficult to reverse the vicious fiscal circle we find ourselves spiraling down.

However, there are interventions the Government can and must take to alleviate the crisis and prevent well-run councils ‘going to the wall’ and the associated knock-on impacts being seen across a society which has already reached a dangerous tipping-point.

Firstly, given children’s services make up almost half the forecast budget overspends across CCN member councils, we absolutely need you to give the same priority to supporting children’s social care as you did for adult social care last year.

This was hugely beneficial and helped alleviate the pressure across the health and care system. Alongside that same inject of financial support, there is also an urgent need to address the systemic challenges in the ‘broken’ provider market that are resulting in huge increases in the cost of placing children requiring care in appropriate accommodation. To be clear, we need both the immediate financial remedy and longer-term cure.

The same approach needs to be applied to address the risks associated with carrying deficits in the Dedicated Schools Grant.

Secondly, I wrote to the Minister for Local Government in July 2023 regarding my concerns with the slow progress by the Council’s external auditors in regard of both the outstanding 2021/22 audit work and the 2022/23 financial statements audit.

The backlog of outstanding audit activity is now becoming even more significant; recently Moody’s have reduced the Council’s financial rating and identified the audit backlog as one of the key reasons.

Further delays will almost certainly lead to a further reduction in the Council’s credit rating which would, without a doubt make raising external finance virtually impossible. I’m sure I don’t need to point out that the impact of reduced credit ratings will make it harder and more expensive for the Council to attract external investment or to borrow from the market to put even greater funding into delivering much needed permanent housing, to offset the rising demand and spiralling costs of providing emergency accommodation also bringing us to our knees.

Thirdly, and this is where I need to be really parochial, the Council’s current financial challenges have been exacerbated by years of chronic underfunding attributable to an archaic funding formula that fails to take account of super-ageing demographics, complex needs, sparsity and deprivation in areas such as social care, children’s services and public health.

In the absence of a conclusion of the latest fairer funding review during this Parliament, I would implore you to significantly increase the Rural Services Delivery Grant element of the final LG Settlement for 2024/25.

I understand this point was made by Cornwall’s MPs last week when they met with the Local Government Minister, Simon Hoare MP, and to his credit he at least recognised and took on board the severe challenges faced by the Council.

Finally, I also ask that regulations relating to any exemptions to the Council Tax premium on second and empty homes are set out as a matter of urgency to enable the Council to give appropriate notice to property owners and allow for greater precision in our medium-term financial projections.

In conclusion Secretary of State, it is evident that Government intervention to avoid the financial abyss faced by the sector is now of critical importance and once again I implore you to take swift and decisive action to enhance the final Local Government Settlement while you still have the chance.