"More than a third of councils - and almost half of social care councils - responding to a new Local Government Association survey say they are likely to have to apply for emergency government bailout agreements to set budgets in the next three years. While funding levels have risen over the last few years and multi-year settlements provide much-needed certainty, costs and demand pressures continue to outstrip the overall amount of funding available to councils."
"The LGA survey shows budget-setting will be another hugely challenging task for many councils this year and beyond. The survey found that almost 6 in 10 councils told the LGA it will be fairly or very difficult to set a balanced budget in 2026/27. While 8 in 10 councils feel they will be able to meet their minimum legal duties in 2026/27, this number halves to 43 per cent by 2028/29."
"More than a third (34 per cent) of councils have already applied or are very or fairly likely to apply for Exceptional Financial Support (EFS) in at least one of the financial years between 2026/27 and 2028/29. These EFS arrangements have allowed councils to cover day-to-day revenue costs by borrowing or with capital receipts. In some cases, this has seen councils able to increase council tax above current referendum limits."
"However, the LGA insists these arrangements are not a sustainable way of managing council finances and plugging funding gaps. The LGA is calling on government to provide a significant increase in resources in the imminent final Local Government Finance Settlement to protect the financial sustainability of councils and our local services and empower councils to unleash growth and service reform at scale. It said government also needs to commit to"
A significant share of councils, especially those with social care responsibilities, are likely to require emergency government bailout agreements to set budgets within the next three years. Funding increases and multi-year settlements have improved certainty, but rising costs and demand continue to exceed available resources. Under-funding leads to fewer neighbourhood services, reduced prevention investment, greater pressure on vulnerable people, and communities seeing limited service improvement. Almost 6 in 10 councils expect difficulty setting a balanced 2026/27 budget; the share able to meet minimum legal duties falls from 80% in 2026/27 to 43% by 2028/29. Exceptional Financial Support (EFS) has been used to cover revenue via borrowing or capital receipts, sometimes enabling council tax rises above referendum limits, but EFS is not sustainable. The LGA calls for a significant resource increase in the final Local Government Finance Settlement to protect council financial sustainability and support growth and service reform.
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