Thirty councils could borrow up to £1.5bn of government support
A record 30 councils in England have been granted “exceptional” financial support from central government to help them balance their books.
The latest intervention is aimed at delivering “vital” public services, protecting community assets and “promoting” economic stability, the Ministry of Housing, Communities and Local Government (MHCLG) said on Thursday.
It comes amid an ongoing funding crisis for local authorities, with many struggling with rising demand for housing.
The Exceptional Financial Support (EFS) process, which has existed since 2020, enables councils to take out loans to pay for day-to-day services.
In previous years, local authorities were also able to sell assets to get cash. However, for the first time, the government has said councils will not be able to dispose of community and heritage assets.
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Thirty is the highest number of councils to receive financial support, up from 19 last year. Only eight local authorities were involved in the EFS process in the 2023-24 financial year.
In the latest round, a total of around £1.5bn could be borrowed by councils.
Lambeth Council will be allowed to borrow £40m to help specifically manage “financial pressures” within its Housing Revenue Account (HRA), MHCLG said.
The south London borough had said the support would be “critical” to help it balance its HRA amid a surge in demand for temporary housing and maintaining its ageing housing stock.
Six councils that are in special measures, having effectively declared themselves bankrupt, have been granted help under the latest EFS scheme. These are: Birmingham, Croydon, Nottingham, Slough, Thurrock, and Woking.
Jim McMahon, minister for local government and English devolution, said: “We are under no illusion of the state of council finances, and have been clear from the outset on our commitment to get councils back on their feet and rebuild the foundation of local government.”
London Councils, the umbrella organisation which represents the capital’s 32 boroughs and the City of London, warned that EFS does not offer sustainable help.
“Exceptional Financial Support is a misnomer – it is no longer exceptional and it fails to provide sustainable financial support, instead forcing local authorities to borrow to maintain basic statutory services,” Claire Holland, chair of London Councils, said.
"Rather than resolve the crisis, EFS is a short-term measure that leaves us with more long-term debts to worry about.”
Seven London councils have been granted support under the EFS system, up from two last year. It will allow the boroughs to borrow up to £418m.
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