Hampshire County Council's chief has called for 'root-and-branch' changes to how local authorities are funded as risings costs continue to cripple public services.

Members of the council's cabinet will hear how the authority is intensifying its calls this summer for urgent action as civic chiefs look set to face their biggest financial challenge to date.

This comes amid a climate of worsening public finances, growing demand for local services and significant inflation.

In a report to be presented at the meeting on July 19, current progress will be outlined towards developing a Medium Term Financial Strategy to 2025/26, which could see the County Council’s budget gap extend to £200m – more than anything ever faced by the authority in its history.

Leader of Hampshire County Council, Councillor Rob Humby said: “The financial pressures facing the county council by 2025/26 will be our toughest yet. We are not alone in this unprecedented financial situation, this is a national problem as the entire system of local government finance is simply not fit for purpose and urgent root-and-branch changes are needed to this funding model if the sector as a whole is going to survive this difficult period.

“For many years, the cost of delivering local services to the people of Hampshire has outstripped diminishing funds we have received from Government. The money we get in from increased council tax and from Government each year simply is not enough to cover the increased costs of inflation and growth in services - particularly in social care, but also across highways, waste and the growing need for new technologies. By the end of the 2023/24 financial year, we will have already reduced our budgets by a total of £0.6billion since the start of austerity over a decade ago.

“This financial backdrop has been made even worse by huge price rises in the adults’ social care market (up to 18 per cent in some areas), no extra Government funding expected for the next two years, significant inflation in the costs of energy, food and fuel, and pressures in the labour market due to shortages of staff and increases in the national living wage.

“Furthermore, the amount Government lets us raise from council tax towards the cost of adult social care has been cut from 2 per cent to 1 per cent each year - reducing our council tax annual income by around £28m by 2025/26."

With the prospect of a nation recession also looming, Cllr Humby revealed early forecasts have suggested the situation could yet significantly worsen.

“It’s difficult to predict with certainty where that leaves the county council in the years ahead, but our current forecasts estimate a potential budget gap of up to £200m by 2025/26, which is far greater than anything we have ever faced," he added.

“The question is now whether we can balance the county council’s budget ourselves - but at what cost to our local services and the potential impact on Hampshire residents? Or whether we must approach Government to begin talks about our financial predicament.

“The county council has always had an excellent reputation for strong financial management and planning early to ensure we keep delivering a balanced budget, as required by law. Our number one priority remains to the people of Hampshire and the most vulnerable in our communities and we will continue to do everything in our power to press for critical core changes to local government finance, in order to fulfil that ongoing commitment.

“It is with Hampshire’s residents in mind that we are ramping up our talks with Hampshire’s MPs and central Government, to stringently press for important local services to be safeguarded for everyone who lives, works and learns in Hampshire - now and into the future.”

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