New figures compiled by the union, based on information directly from local authorities, show council finances remain in a dire state, despite a cash injection following Labour’s general election victory last year.
UNISON’s annual council “funding gap” report estimates the shortfall, between what councils need to run services and what they receive, will amount to £4.1bn in 2026/27.
The figure would have been far higher but for intervention from Westminster through the local government finance settlement earlier this year, and exceptional support for 30 authorities totalling £1.3bn. This was intended to prevent more councils effectively going bankrupt.
But despite this intervention, the predicted funding shortfall remains above £4bn for the second year running – piling further strain on overstretched services, communities and staff.
Evidence from across the UK shows that, after more than a decade of austerity, councils are being forced to take increasingly drastic steps to balance their books.
The report warns some of society’s most vulnerable adults and children face losing vital support, with few places escaping the impact of deep cuts.
Rising inflation and energy costs, plus the growing demand for adult and children’s social care, are pushing fragile council budgets to breaking point, UNISON says.
Homelessness and the need for temporary accommodation are also escalating, with councils warning the rising cost of providing emergency housing is swallowing up a disproportionate share of local budgets. This leaves fewer resources available for other essential services, from road repairs to youth provision.
Previously, many councils cut discretionary services, sold assets or borrowed more to balance their budgets. Now, senior officials are slashing statutory services they are legally obliged to provide. Examples include:
- Birmingham City Council announced £148m of cuts in March. This includes removing £39m from children’s services and £43m from adult social care.
- Cornwall Council, which carries £1.3bn in debt, announced cuts worth £48.7m. Services lost include a scheme supporting children who experienced online sexual abuse or exploitation.
- Derbyshire County Council, which closed eight care homes and five day centres in November 2024. Following May’s local elections, its new Reform UK leaders warned further closures are likely, with up to 100 council staff at risk of losing their jobs.
- Glasgow’s Integration Joint Board, a partnership between Glasgow City Council and the NHS, is tackling a £36m deficit in care and health by cutting more than 60 council jobs and limiting social work support to those with “critical need only”.
UNISON believes central government needs to deliver significantly improved, multi-year funding deals for councils to restore stability. It says they should be based on a revised and fairer funding formula to reflect local need, rather than using outdated data.
The union says councils should also curb outsourcing and put the focus on in-house services, scrutinising external contracts with a clear public-interest test.
Reorganisation must also be fully funded, with no compulsory redundancies or disruption to local services, UNISON adds, with safeguards for employees’ pay, pensions and conditions.
UNISON general secretary Christina McAnea said: “Councils are still billions short of the money they need to provide essential services.
“Local authorities are being forced to make cuts that often hit the most vulnerable hardest.
“After 15 years of ruthless austerity, no community has been left untouched. Frontline staff are exhausted, services are overstretched, and thousands of jobs at risk.
“Investment in councils, their communities and workers is urgently needed. This means multi-year funding settlements so local authorities can plan more effectively and deliver services without the constant fear of collapse. Action is also needed to protect jobs, wages and employment terms threatened by council reorganisation.”
Notes to editors:
– UNISON’s report Town Hall Shortfall can be read here. Data was gathered using freedom of information requests from May to September 2025. Councils’ financial strategy documents were also analysed.
– 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
Mark Conrad M: 07809 623703 E: m.conrad@unison.co.uk