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).
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.
For example, Hampshire County Council has proposed withdrawing all spending on homelessness support services across the county from March 2025.
In March this year, Britain’s largest authority, Birmingham City Council, approved one of the biggest local government cuts packages in history – including plans to scrap up to 600 jobs, slash social care and children’s services funding, and reduce waste collections.
Middlesbrough Council has set aside £3.6m for future redundancies as it tries to save a further £21m by 2026/27. East Riding Council has told staff it could scrap any post that has been vacant for more than six months.
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.
Years of austerity mean services have already been cut substantially, with widespread job losses and a reduction in vital support for some of the UK’s most deprived areas, says UNISON.
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.
At Eastleigh Borough Council, the estimated £4.9m funding gap for 2025/26 represents 37.2% of its £13.1m annual revenue budget. Other councils where predicted shortfalls represent a considerable proportion of day-to-day spending plans include Rushmoor Borough Council (34.6%) and Thurrock Council (30.9%).
Thurrock issued a section 114 notice in 2022 amid a financial emergency caused partly by a high-risk investment strategy and a £469m budget deficit. The authority was later subject to government intervention.
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.
“Labour has inherited a mess, with essential services battered and bruised. 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.”
Notes to editors:
– UNISON’s report Councils on the Brink can be read here. The data was gathered through freedom of information requests collated between May and early September 2024 and an analysis of councils’ published financial strategy documents.
– The report is published to coincide with the first full day of the 156th Trades Union Congress in Brighton.
– UNISON is the UK’s largest union with more than 1.3 million members providing public services in education, local government, the NHS, police service and energy. They are employed in the public, voluntary and private sectors.
Media contacts:
Anthony Barnes M: 07834 864794 E: a.barnes@unison.co.uk
Liz Chinchen M: 07778 158175 E: press@unison.co.uk
The article Funding shortfall of £4bn leaves councils on a precipice first appeared on the UNISON National site.
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