Rishi Sunak is under pressure from Tory MPs to boost the funding settlement for on-the-brink councils.
More than 40 Conservative backbenchers have signed a letter to the Prime Minister warning that without emergency cash, many councils will be forced to cut crucial frontline services and hike council tax in an election year.
Struggling councils have repeatedly called on the Government to provide emergency funding to protect services for local communities, as they have grappled with rampant inflation following a decade of significant funding reductions.
The Government last month announced a £64 billion provisional funding package, which, following a consultation, will be finalised in February with a vote in Parliament.
MPs who signed the letter, first reported by the Times, threatened to vote against the Local Government Settlement early next month unless more cash is made available.
They wrote they were “disappointed” with the lack of extra money and “exceptionally concerned that without any additional investment, the overwhelming majority of upper tier councils in our areas are planning service reductions and higher council tax in order that they can pass a balanced budget”.
“There is still an opportunity to rectify the situation and ensure MPs are able to support the vote on the Local Government Settlement within the House of Commons in early February.
“We would therefore urge you to do all you can to use the Final Local Government Finance Settlement to provide additional funding for local government to ensure that the councils in our areas can continue to provide the services that our residents depend upon on a regular
Signatories of the letter, organised by the County Councils Network which represents England’s largest councils, include former local government secretaries Greg Clark and Robert Jenrick, former home secretary Dame Priti Patel, former Tory Party chairman Sir Jake Berry, and chairman of the centrist One Nation caucus Damian Green.
They said any additional funding “should be directed towards children’s services and home to school transport as combined these are exerting unprecedented pressure on local government services”.
Chancellor Jeremy Hunt could consider using some of the fiscal headroom – which predictions have put as high as £10 billion – to cave to their demands as he prepares for his March 6 Budget.
The first Office for Budget Responsibility forecast this week will provide clarity on how much money is available for spending and pre-election tax giveaways, which he has made clear are his priority.
The local government finance crisis has been highlighted by a string of section 114 notices, which effectively declare councils bankrupt.
A Department for Levelling Up, Housing and Communities spokesperson said: “We recognise councils are facing challenges and that is why we have announced a £64 billion funding package – a real terms increase at an average of 6.5% – to ensure they can continue making a difference, alongside our combined efforts to level up.
“We recently consulted on the final settlement for next year and are now considering the responses carefully.
“Councils are ultimately responsible for their own finances, but we remain ready to talk to any concerned about its financial position.”