Councils in England face a £7bn funding gap within three years, according to new analysis from the Local Government Association (LGA), which warns of longer waits for social care and cuts to local services.
The LGA’s analysis shows councils face a £2bn funding gap this year, rising to £4.3bn in 2027/28 and reaching £7bn by 2028/29. That figure exceeds current council spending on roads, transport, homelessness and housing services combined.
Published ahead of the LGA’s Annual Conference in Bournemouth this week, the analysis warns that by 2028/29, councils will face extra cost pressures equivalent to 22% of their current spending just to maintain existing service levels.
The LGA said this is driven by rising demand for homelessness support, children’s services, adult social care, home to school transport, and new national requirements such as Simpler Recycling and the Emissions Trading Scheme.
Councils have received some funding growth in recent years, and a multi-year funding settlement has improved financial certainty, though some councils have benefited more than others from new allocations. The LGA said local government continues to drive efficiency through shared service provision and digital transformation programmes.
However, 36 councils have been granted exceptional financial support by government to set balanced budgets this year, which the LGA described as unprecedented.
The organisation is calling on the next prime minister and their government to set out a new path for local services that does not rely on council tax rises, short-term fixes or emergency bailout arrangements. It wants a commitment to long-term reform of local government finance, including a cross-party review of council tax, business rates retention and other funding sources.
The LGA also said government needs to work with councils on reforms to services including SEND and adult social care, alongside prevention-focused public service reform, devolution, and stronger digital and technology foundations.
Councillor Louise Gittins, the LGA’s chair, said: “The cost and demand pressures facing councils are unrelenting. In just three years, councils will need around 25% more money simply to stand still. Without action, the services people rely on every day, from social care to safe streets, will be eroded.
“Whoever takes up the keys to Number 10 will have a lot of competing priorities. But fully funded, sustainable public services will need to be at the heart of any plans to improve lives and inspire hope in the future.
“Councils want to get on with supporting people, boosting local economies and delivering local priorities. But they can only do that with the long-term funding they need, and public service reform.”
Image credit: Pressmaster/Shutterstock
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