Public services in the UK were generally better funded in the past, so what's happened?
Technically, UK councils don't go bankrupt. They issue a Section 114 notice, indicating they cannot meet their spending commitments for the year.
This situation has arisen due to a combination of factors:
- Reduced central government funding: Since 2010, funding for local authorities has seen significant cuts. This amounts to a decrease of around 30% in real terms.
- Increasing demand for services: Costs like adult and children's social care have grown, putting further strain on budgets.
- Investment risks: Some councils have attempted to generate revenue through risky investments, which haven't always paid off, further exacerbating financial difficulties.
These combined factors have created a situation where some councils cannot balance their budgets, leading to the issuance of Section 114 notices.
Meanwhile, the government considers tax reductions from which the wealthy will be the major beneficiaries.
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