Isle Of Wight Council Leader Warns Of Growing Funding Crisis As Government Support Falls

The Leader of Isle of Wight Council has issued a stark warning about the authority’s financial position, saying Government funding is falling while demand for vital services continues to rise.

Cllr Phil Jordan says he has been in daily contact with Island MP Richard Quigley, who has raised the situation directly with senior Ministers.

Fellow MP Joe Robertson is also supporting the campaign and is expected to ask further questions in Westminster in the coming weeks.

Council leaders say they are united in pressing Government to recognise the Island’s unique challenges and higher operating costs.

According to the Council, core Government funding has reduced by around £100 million a year compared with 2010 levels.

Over the same period, more than 600 jobs have been cut, leaving services focused almost entirely on statutory duties – those the law requires councils to provide.

The authority says the recent Fair Funding Review failed to resolve the situation and, in fact, left the Island worse off.

While Ministers point to rising “Core Spending Power”, the Council says this figure assumes annual Council Tax increases of five per cent and does not reflect the reality that direct Government funding is set to fall by £13 million over the next three years.

With inflation running at around 4.5 per cent annually, leaders argue that projected increases do not come close to covering rising costs.

Around two-thirds of the Council’s entire budget is now spent on adult and children’s social care.

Demand continues to grow, with adult social care alone forecast to overspend by £8 million this year because more residents need support.

Cllr Jordan says the authority has already taken tough decisions – reducing borrowing to near zero, allowing historic loans to expire, and selling surplus assets.

However, he warned that asset sales are one-off measures and cannot fund ongoing services.

After sustained pressure, Government officials have now formally acknowledged that Isle of Wight funding is falling rather than rising – something the Council says is a crucial step, but not enough on its own.

The authority is seeking around £24 million per year in additional funding to deliver statutory services on a par with mainland councils. In the meantime, it has applied for Exceptional Financial Support (EFS), which allows councils to borrow to cover structural gaps.

For the Isle of Wight, that gap is estimated at £55 million over three years.

Servicing that debt would cost approximately £4.6 million annually for 20 years – around £94 million in total – which leaders say simply pushes today’s problems onto future residents.

The Council is working to avoid issuing a Section 114 Notice, which would effectively declare it unable to set a legal budget and could lead to Government commissioners taking control of financial decisions.

Cllr Jordan said:

“We will keep statutory services going, protect the most vulnerable, and be open with residents and businesses about the difficult choices ahead.

"We will continue to push for fair treatment – recognition of our Island’s uniqueness, a funding formula that matches reality, and the resources we need to deliver the services people rely on.

"The ball is now firmly in the Government’s court.”

Key facts highlighted by the Council

• Core Government funding down £100m compared with 2010

• Workforce reduced by more than 600 posts

• Direct Government funding set to fall by £13m over three years

• Core Spending Power projected to rise by 6% over three years (based on assumed 5% annual Council Tax increases)

• Inflation running at approximately 4.5% per year

• Social care accounts for two-thirds of the total budget, with an £8m in-year overspend in adult care due to rising demand

• Structural funding gap of £55m over three years

What happens next?

The Council says it will continue talks with Ministers and officials about Island-specific funding, prioritise statutory services and vulnerable residents, and provide regular updates to the public.

Residents and businesses will also be invited to take part in budget consultations.

Island MPs Richard Quigley and Joe Robertson are continuing to raise the issue in Westminster, with Council leaders urging Government to recognise the “Island premium” and provide long-term, sustainable funding.