Emergency council bailouts risk becoming ‘business as usual’

The Local Government Association (LGA) has warned councils across England are being pushed to the brink of financial collapse. 

Today (17th October) the LGA have published new research which warns emergency government bailouts are at risk of becoming ‘normalised’ for councils across England. 

The research, which has been published ahead of the Autumn Budget, outlines local authorities are facing steep overspends in 2025/26, particularly in adult social care, children’s services and homelessness support. 

To give context, councils increased their spending, including a 9% rise for adult care, 10.1% for children’s social care and 38.8% for homelessness, although some have already reported pressures in the first quarter of the year. 

According to the research, between 2022 and 2025 councils overspent on average by over 14% on children’s services and more than 50% on homelessness. In response, many have resorted to emergency measures such as in-year service cuts and raiding dwindling reserves.

So far this year, 29 councils – nearly one in six with social care duties – have required Exceptional Financial Support (EFS) agreements, enabling them to borrow, sell assets, or raise council tax beyond national limits just to stay afloat. As such, the LGA is calling for an urgent review of EFS arrangements, warning that the current approach is unsustainable.

‘Council costs and demand for services are soaring – especially in children’s and adult social care, homelessness and SEND home to school transport – leaving significant potential overspends this year,’ Cllr Louise Gittins, chair of the LGA, said. ‘The consequences are visible everywhere. Fewer neighbourhood services, reduced investment in prevention, and growing pressure on those who rely most on local support.’

‘The country’s success depends on places like Barnsley, Buckinghamshire, Cambridge, and Cumberland being able to thrive. Councils have the legitimacy, local knowledge and ambition to make that happen. But they need a fair financial foundation to stand on,’ Gittins continued. 

‘If the government is serious about growth, public service reform and opportunity for all, it must start with councils – because when councils succeed, the country succeeds.’

Before the Autumn Budget is announced on 26th November, the LGA is calling on the Chancellor to prioritise:

• Providing councils with a boost in resources – similar to when the government introduced the guarantee of multi-year settlements and axed reliance on competitive bidding
• Ensuring transitional arrangements are put in place to protect councils from both cash-terms and real-terms cuts where necessary
• Address the £5bn SEND deficit, which continues to hang over local budgets. Writing it off, as part of the wider SEND reform programme, would give councils and schools the chance to focus on improving provision rather than firefighting finances

Photo by Christopher Bill via UnSplash

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