The scale of the challenge facing Andy Burnham's promised 'rebalancing of power' from Whitehall to the regions was underscored this week by a massive funding gap confronting local councils. The likely next Prime Minister, who has served as Greater Manchester mayor for nine years, outlined his vision for the 'biggest rebalancing of power our country has seen' in a speech in Manchester on Monday. He pledged a council housebuilding boom, greater public control over essentials like water and energy, and a decentralisation drive led by a new No 10 North operation based in Manchester.
Funding Gap Exposes Devolution Hurdles
However, the Local Government Association (LGA) provided a stark reminder of the imbalance on Friday, warning that by 2029, councils across England will face a £7 billion funding black hole. For the seven councils in Tyne and Wear, Northumberland, and County Durham, that shortfall exceeds £200 million. This sum is larger than the current annual English council spending on roads, transport, homelessness, and housing services combined. The LGA also warned that councils would need 22% more than their current budgets just to maintain services at today's levels by 2028/29.
Mr Burnham acknowledged the challenge, stating: 'The stark imbalance in resources between national government and local government is holding back growth. If councils can’t fix potholes, what chance do they have of bringing forward major regeneration schemes to get growth going?'
Social Care and SEND Pressures Mount
A long-standing concern in local government is that the spiralling costs of social care and support for children with special educational needs and disabilities (SEND) will consume an overwhelming share of council budgets, leaving authorities unable to do more than provide statutory services. Since 2010, councils have endured huge budget cuts, resulting in mass layoffs, closure of community assets like leisure centres, and crumbling infrastructure. Leaders in the North East have called for a rethink of the 'broken' council tax system, which forces residents in the region to pay more than those in wealthier areas like Westminster, and for reforms to put social care and SEND on a sustainable footing.
This year, 36 councils have required exceptional financial support from Whitehall to balance their books. Newcastle City Council leader Colin Ferguson, whose council has cut over £400 million from spending since 2011, called for an end to 'sticking plaster bailouts.' He said: 'Andy Burnham talked about greater devolution for regions, which we would welcome, but it can’t just be funding for regional mayors. Local councils, and cities like Newcastle, must have a seat at the table, better funding, and greater freedom to act.'
Burnham's Devolution Dream vs. Fiscal Reality
Mr Burnham, who is expected to give greater responsibility to metro mayors including the North East's Kim McGuinness, has already backed her demands for new powers to tackle youth unemployment. However, addressing the state of council finances will be a critical test for his administration if his devolution dream is to become a reality. The LGA's figures serve as a stark reminder that without significant funding reform, the ambitious promises of rebalancing power may remain out of reach.
