1 in 4 UK councils seek govt bailout

One in four councils in England are teetering on the edge of financial collapse, with the looming threat of requiring an emergency government bailout to avert bankruptcy in the next two fiscal years, according to a recent survey conducted by the Local Government Association (LGA).
The LGA is urgently appealing to the Chancellor to take immediate action during the Autumn Budget to stabilise council finances and prevent another devastating blow to local services.
This sobering revelation comes on the heels of 18 councils being granted Exceptional Financial Support (EFS) by the government in February, aimed at assisting them in meeting their legal obligation to balance their budgets for the fiscal year 2024/25.
The survey, which polled council chief executives, was released as over 1,500 councillors, council leaders, senior officers, politicians, and stakeholders converged for the commencement of the LGA’s Annual Conference in Harrogate.
In addition to requesting funding to preserve essential services, the LGA is also advocating for collaborative efforts with the government to secure multi-year finance settlements for councils and establish a cross-party review to re-evaluate the local government funding framework.
While the authorisation for councils to utilise capital funds generated through borrowing or the sale of assets such as land and buildings to bridge the shortfalls in their day-to-day revenue spending does provide interim financial relief, there are concerns that it could potentially burden already struggling councils with additional debt and expenses in the future or undermine forthcoming capital projects.
The LGA’s survey underscored a deepening crisis, with several councils perilously close to requiring EFS assistance. The findings revealed that:
- One in 10 councils have contemplated seeking EFS.
- 25% are projected to apply for EFS within the next two years unless additional government funding materialises.
- 44% of councils with responsibilities in social care are poised to request EFS within the next two years without supplemental government support.
Councils were tasked with identifying their top five pressures, which encompassed children’s social care (93%), adult social care (90%), SEND services (80%), school transport (65%), and homelessness (64%). For shire districts, the key concerns included homelessness (85%) and waste services (82%).
Survey results also indicated that two-thirds of councils anticipate the impact of budget constraints on parks, green spaces, and sports services (62%). Nearly 8 out of 10 councils foresee cutbacks in services and support for disabled adults and/or older individuals. Service reductions are also anticipated in services and support for children, young people, and families (63% of relevant councils).
Cllr Louise Gittins, LGA Chair, expressed:
“Councils are the cornerstone of communities. Every day, they strive to safeguard vulnerable children and families, enable our elderly or disabled loved ones to live autonomous lives, maintain clean and pothole-free roads, and facilitate the construction of affordable homes. However, these tasks are becoming increasingly challenging.
“The unprecedented emergency assistance provided to councils this year underscores the extraordinary funding predicament confronting local government. As revealed by our survey, numerous councils are being pushed into precarious financial straits.
“This is not merely about figures on a spreadsheet. The budget reductions that will be required to address mounting funding shortfalls will impact the most vulnerable segments of society and the services upon which our communities rely on a daily basis.
“The Autumn Budget must furnish councils with the financial stability necessary to safeguard the services that our communities depend on each day.”
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