Councils face ‘dire’ cash crisis totalling more than £3.5bn

Huge funding gaps mean job and service cuts are inevitable

Local councils have a hole in their finances exceeding £3.5bn collectively for the coming financial year, making it extremely likely they will have to make huge cuts in essential services and jobs, says a report published today (Friday) by UNISON.

The figures, based on information gathered from local authorities in England, Scotland and Wales, show the true scale of the dire state of local government funding, says the union.

Many authorities will be forced to consider selling land and buildings, as well as slash services for the vulnerable and vital community resources such as waste collection, libraries and leisure centres, UNISON warns.

The list is headed by Birmingham City Council, which is £164m short of its spending needs for next year, followed by Thurrock Council with a gap of £157m. Both councils have effectively declared themselves bankrupt in recent months after issuing section 114 notices.

Other authorities with severe cash shortfalls, according to UNISON’s research, are Hampshire County Council on £82m, Sheffield City Council which is short some £72.7m and Bradford City Council has £72m less than it needs.

The UNISON research Councils Under Pressure shows there are 114 councils (31%) that are at least £10m short of their planned spending requirements, while 15 (4%) are as much as £40m adrift.

The record combined shortfall totals almost £3.57bn across councils in the three nations for 2024/25. It means the local authorities will be forced to rely on virtually non-existent cash reserves. All are likely to have to make cuts to services and their workforces, says UNISON.

The situation is set to worsen too with the cumulative funding gap rising even further in 2025/26 to over £7bn, warns UNISON.

Regardless of their overall political control, the future is bleak for councils with increased energy costs, a decade and more of reduced government funding and inflation all worsening their financial position, the union adds.

The huge scale of the budget shortfall across local government means a growing number of councils are teetering on the brink, UNISON warns.

This precarious state of council budgets couldn’t come at a worse time with thousands of families ever more reliant on community services due to cost of living pressures, adds UNISON.

The shortfalls increase the risk that many authorities will consider raising their council tax as high as possible next time, says the union.

UNISON’s research is based on data relating to 369 (out of 371*) local councils across Britain. It found that the vast majority (86%) have a predicted budget gap, with just 52 (14%) saying they are on course to balance the books.

Most are responding to the crisis by cutting services and activities, including:

  • Hampshire is reviewing its school crossing patrols, putting up to 45 jobs at risk.
  • Woking has put 350 workers across the authority on notice of redundancy.
  • Kirklees has said it plans to axe 250 jobs between October and next March.
  • Kent is considering the closure of 37 children’s and youth centres across the county.
  • York is looking at the introduction of charging for domestic garden waste collections, pushing up the cost of car parking across the city and reducing spending on highway maintenance.

UNISON says Jeremy Hunt must provide extra grant funding in the autumn statement to help weather the immediate challenges or local authorities and their communities will no longer be able to cope.

Work must also be done at pace to reform how councils are funded to tackle the huge reduction in central government resources since 2010, urges the union.

UNISON general secretary Christina McAnea said: “Communities rely on their local authorities for all manner of essential services, such as waste collection, social care, road repairs and parks and other open spaces.

“But councils are on their knees. Ministers seem to care very little about public services and local government has been hit hard over very many years.

“Essential services can’t run on thin air. Staff levels have already been cut to the bone in desperate attempts to balance the books.

“Yet more service cuts and job losses are sadly inevitable across the country unless the government intervenes with the lifeline of significant extra funding. Not just for those on the brink, but to councils everywhere.”

Notes to editors:
– UNISON sent a Freedom of Information request to all 371 local councils in England, Scotland and Wales for their 2024/25 funding shortfall figure. A total of 181 responded with the relevant data. For most of the remainder, the information was gathered from medium-term financial plans or papers from budget-setting meetings. Further details about the research can be found here with details of individual councils to be found here.
– *No data has been presented or found for Newham or Torbay councils.
– Funding figures are from the latest data available on 27 September 2023.
– 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.
– The top 20 funding gaps are as follows:

Council Region/nation Funding gap for 2024/25 in £
Birmingham City Council West Midlands 164,838,000
Thurrock Council Eastern 156,540,000
Hampshire County Council South East 82,000,000
Sheffield City Council Yorkshire & Humberside 72,700,000
Bradford City Council Yorkshire & Humberside 72,000,000
Liverpool City Council North West 67,038,000
Leeds City Council Yorkshire & Humberside 59,200,000
Nottingham City Council East Midlands 50,903,000
Shetland Islands Council Scotland 47,100,000
Kirklees Council Yorkshire & Humberside 47,000,000
Highland Council Scotland 46,688,000
Norfolk County Council Eastern 45,920,000
Bournemouth, Christchurch & Poole Council South West 44,400,000
Leicester City Council East Midlands 44,200,000
Somerset County Council South West 41,562,000
Warrington Borough Council North West 38,957,000
Medway Council South East 38,745,000
Glasgow City Council Scotland 37,700,000
Edinburgh City Council Scotland 37,600,000
Caerphilly Council Wales 37,414,000

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