Worries cast as one in four councils could go bankrupt
New research from the Local Government Association (LGA) shows one in ten have discussed emergency support with the government.
Since the cost-of-living began to bite, the number of local authorities in England that have had to declare themselves bankrupt has been stark. Unfortunately, new research from the LGA shows the trend could continue into 2026 if the government don’t provide sufficient support.
In the early hours of this morning, the LGA published their survey findings which outlines councils are warning of a ‘worsening crisis’ that could result in cuts to vital public services amid a funding gap of more than £2bn next year.
Cllr Louise Gittins, LGA chair, said: ‘Councils are the backbone of communities. Every day they strive to protect vulnerable children and families, support our older or disabled loved ones to live independent lives, keep our streets clean ad pothole-free and build affordable homes but this is becoming increasingly difficult.’
The survey – which has been published as more than 1,500 councillors, council leaders, senior officers and politicians gather for the start of the LGA’s Annual Conference in Harrogate – revealed that an unprecedented 18 councils were given Exceptional Financial Support (EFS) from the government in February to help meet their legal duty to balance their books.
The decision granted local authorities unusual permission to borrow money and sell land and buildings, which the LGA warned provided ‘temporary financial relief’ but could overload ‘already struggling councils with further debt and costs in the future’.
Against this backdrop, council executives revealed one in ten local authorities have already discussed receiving emergency support with the Ministry of Housing, Communities and Local Government.
Cllr Gittins added: ‘The unprecedented emergency support given to councils this year reveals the extraordinary funding emergency facing local government. As our survey shows, many more councils are being pushed into a precarious financial position.
‘This is not just about numbers on a spreadsheet. Budget cuts needed to plug growing funding gaps will affect the most vulnerable members of society and the services our communities rely on every day.’
Within the survey councils were asked to identify their top five pressures, which include:
- Social care – children’s (93%) and adult (90%)
- Special educational needs and disability services (80%)
- School transport (65%)
- Homelessness (64%)
In addition, two thirds of councils claim parks and green spaces will be affected alongside sport services (62%).
Following these tragic findings, the LGA is now calling on Chancellor Rachael Reeves to stabilise council finances in the upcoming Autumn Budget, including a multi-year settlement and a review into changing the local government funding system.
‘The Autumn Budget must provide councils with the financial stability they need to protect the services our communities rely on every day,’ Cllr Gittins said.
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