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Councils make plea to Reeves as one in four expect to ask for government bail-out
Councils in England are urging the chancellor to take “immediate action” to help stabilise their finances after one in four said they expect to apply for an emergency government bail-out in the next two years.
The findings have come from a survey of council chief executives as Rachel Reeves prepares to deliver her maiden Budget next week.
The survey, by the Local Government Association (LGA), found that around one in 10 councils have discussed the possibility of requesting exceptional financial support (EFS) from the Ministry of Housing, Communities and Local Government (MHCLG) this year.
If no extra government funding is provided, 25% said they are likely to apply for EFS in the 2025-26 financial year and/or the following year.
Of the councils with social care responsibilities, 44% said they are likely to apply for EFS in 2025-26 and/or 2026-27 without additional government funding.
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The results further highlighted the growing financial pressures facing councils as they grapple with issues such as homelessness.
Louise Gittins, chair of the LGA, said: “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.
“The Autumn Budget must provide councils with the financial stability they need to protect the services our communities rely on every day.”
Councils were asked to identify their top five pressures. For shire districts, homelessness (85%) and waste services (82%) were singled out as their top concerns.
Local authorities with social care responsibilities identified children’s social care (93%), adult social care (90%), services for special educational needs and disabilities (80%), school transport (65%), and homelessness (64%) as their biggest pressures.
A total of 195 councils responded to the survey, which was 62% of those asked.
This month it emerged that Newham Council in London has requested EFS from the government to deal with a 936% increase in temporary accommodation costs.
The council also became the first social landlord to receive the lowest consumer rating of C4 under the English regulator’s new regime.
In February, 18 councils were given EFS from the government to help meet their legal duty to balance their books in the current financial year.
This includes them being given permission to use capital funds raised through borrowing, or the sale of assets such as land and buildings, to plug funding gaps in their day-to-day revenue spending, the LGA said.
In the past couple of years, six councils have effectively declared themselves bankrupt. Nottingham, Slough, Croydon, Thurrock, Woking and Birmingham councils have all issued Section 114 notices.
In August, government figures showed that council spending on emergency temporary accommodation had reached £2.29bn in a year.
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