Funding Shortfall of £4bn Leaves Councils on a Precipice
Councils across England, Scotland and Wales have a collective hole in their finances amounting to more than £4bn for the coming financial year, way beyond any previous estimates, says UNISON research published today (Monday September 9).
New figures, based on information from local authorities, show council funding is in a dire state with massive cuts likely to essential services and jobs, says the union.
The report, Councils on the Brink, warns that failure to rectify the growing problem soon risks ‘the widespread collapse of local government’.
Many authorities could be forced to sell land, buildings and other capital assets, as well as cut back vital community services like rubbish collection and recycling, libraries, public toilets and leisure centres even further, UNISON warns.
According to UNISON’s research, the five councils with the biggest predicted shortfalls for 2025/26 account for a half-billion pound funding gap. These are Hampshire County Council (£132m), Bradford City Council (£126m), Birmingham City Council (£119m), Somerset Council (£104m) and Leicester City Council (£90m).
The funding gap measures the difference between each council’s income and the amount needed to maintain promised service levels. But as the shortfall grows between the cash local authorities need and what they actually have to spend, crucial services and jobs are being slashed. This is having a potentially catastrophic and far-reaching effect upon communities, says UNISON.
Without urgent government support, the union is warning that the combined funding shortfall could balloon to £8.5bn by 2026/27, leaving many councils struggling to provide essential local services and protect jobs.
UNISON’s figures, based on freedom of information requests and councils’ own financial forecasts, paint a far bleaker picture than other estimates.
In England alone, the gap is expected to reach £3.4bn by 2025/26, significantly surpassing the £2.3bn projection published by the Local Government Association for English councils in June.
Many local authorities are now on the brink of financial collapse and the union says this new data suggests many more could soon follow suit.
Since 2018, eight councils – including Birmingham – have issued section 114 notices, meaning they risk failing to meet the legal requirement to balance their books.
UNISON’s data also reveals the local authorities facing the biggest predicted funding gaps relative to their annual budgets. While unitary or county councils delivering vital adult care and children’s services remain under enormous pressure, the huge financial strain on many districts is even more apparent when measured this way.
UNISON general secretary Christina McAnea said: “Councils are teetering on the brink of financial disaster. Countless essential services and very many vital jobs are at risk, with terrible consequences for communities across Britain.
“After 14 years of ruthless austerity, the very fabric of local society is under threat. Councils are quite simply the linchpin of local areas, so when services go, many people are left vulnerable, with no one to pick up the pieces.
“Local authorities were clobbered by the previous government, whose harsh financial settlements left councils with no option but to sell off the family silver, auction off green spaces, close key community facilities and let thousands of workers go. Only swift and decisive action to stabilise local finances will do.
“The new government understands the value of healthy public services and the role they can play in generating economic growth, in a way its predecessors simply didn’t. So as tough as the financial situation may be, ministers cannot ignore the terrible plight of authorities of every political persuasion.”
“There’s an unquestionable need to turn the page on the destructive cuts of the past and invest in services and staff to help councils rebuild Britain.”
