Quarter of councils fear bankruptcy

One in four councils in England are likely to have to apply for emergency government bailout agreements to stave off bankruptcy in the next two financial years (2025/26 and 2026/27), a survey by the Local Government Association (LGA) has found.

Ahead of next week’s budget, the organisation is calling on Chancellor Rachel Reeves to take immediate action to stabilise council finances to avoid further cuts to local services including arts and culture.

An unprecedented 18 councils were given Exceptional Financial Support (EFS) from the Government in February to help meet their legal duty to balance their books this year (2024/25).

A quarter of councils responding to the survey said they are likely to apply for EFS in 2025/26 and/or 2026/27 without additional government funding.

LGA chair Louise Gittins said: “The unprecedented emergency support given to councils this year reveals the extraordinary funding emergency facing local government.

“As our survey shows, many more councils are being pushed into a precarious financial position.

“This is not just about numbers on a spreadsheet. Budget cuts needed to plug growing funding gaps will affect the most vulnerable members of society and the services our communities rely on every day.”