Bristol City Council boss issues budget warning as ‘one in 10 councils’ could go bust

The chief executive of Bristol City Council has issued a dire budget warning as “one in 10 councils” across the country could go bust.

Rising demand for essential services like social care and temporary housing is quickly outpacing how much the council can pay for overall.

Stephen Peacock told councillors on the overview and scrutiny management board that the council’s budget was facing “unprecedented challenges and unsustainable demand”. Work is taking place to stop budgets spiralling in three main areas.

Legally, the council must provide social care for adults who need it, as well as look after children in care and provide temporary housing for people facing homelessness. But the cost of providing these services is rising and now swallowing up a massive chunk of the council’s budget.

Similar pressures are facing many councils throughout England, with several recently effectively declaring bankruptcy, like in Birmingham and Nottingham. Issuing a Section 114 notice means the government sends in commissioners to take drastic action to balance the books.

Mr Peacock said: “One in 10 local authorities are considering issuing a 114 notice. The government and the opposition have effectively both issued similar messages about whether there will be any more money coming.

“We have demand-led services which are in some cases showing runaway growth with no additional funding, and a negative real-terms autumn statement settlement. When you put all of those things together, just hoping you’re not one of the first people to go under, doesn’t look like a good strategy.

“Hoping more money will come down the track and just snipping bits of the budget away feels like the usual death by a thousand cuts. So you have to think again, because otherwise how do you motivate your staff? How do you explain the complexity to your residents? And how do we make something that can be delivered politically at the doorstep?”

Councils receive most of their income through council tax, business rates and government grants. But the amount they can increase tax is capped each year, and government grants have not kept up with the rising costs of providing local services.

Mr Peacock added: “With the money the government gives us [for temporary housing], you would not be able to rent any property in Bristol. We have a statutory homelessness duty, we have to put people in property, but the amount of money we get is below the level it costs to rent anywhere. That’s the gap caused by policy that has not kept up with the market.

“I see this as a staging post to another more fundamental question: what is the council that the city can afford to have in 2025/26 and beyond? Because unless someone else has a different understanding of how local government finance is going to be, we can all see the trend lines. The way we imagine the role of a council does need a conversation.”