Councils "teetering on brink" in face of £4.3bn funding shortfall: report

Local authorities in England, Scotland and Wales have a collective funding shortfall of more than £4bn for the coming financial year, a report on council finances from UNISON has shown.

In a report published Monday (9 September), titled 'Councils on the Brink', the union said that new figures show council funding to be "in a dire state with massive cuts likely to essential services and jobs".

It warned that the funding gap could force councils to sell land, buildings, and other capital assets, and it could lead to cuts to community services like rubbish collection and recycling, libraries, public toilets, and leisure centres.

The report, which based its findings on local authority financial strategy papers and freedom of information requests, also warned that the £4bn shortfall could rise to £8.5bn by 2026/27.

In England alone, the funding gap for 2025/26 is £3.4bn and is predicted to reach £6.9bn by 2026/27.

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 report also highlighted small councils that are struggling to bridge their funding gaps.

It noted that Rushmoor Borough Council faces a £4.1m funding gap against its net revenue budget of £11.9m, meaning its funding gap represents 34.6% of its predicted revenues.

"So, while financial difficulties at top-tier councils like Birmingham, Nottingham, Shropshire and Bradford often dominate newspaper headlines, UNISON's figures illustrate the all-encompassing nature of the funding crisis and reveal why smaller councils are experiencing huge spending challenges," the report said.

According to the report, councils with funding gaps that represent a higher proportion of their revenue budgets "are likely to find it particularly challenging to set a balanced budget without significant service and job cuts".

The figures showed that councils in Greater London have the highest collective funding gap as a proportion of their collective net revenue budgets by region, averaging 6.8%.

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.

"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."

She later added: "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."

UNISON welcomed the Government’s commitment to introduce multi-year funding settlements, but added that additional emergency grant funding is needed for councils in England in the Chancellor’s Autumn Statement.

Without additional funding, councils in England “will be unable to deal with the immediate financial challenges,” the report said.

In addition, it called on Westminster to provide additional resources for Scotland and Wales.

Adam Carey