FINANCE

40% of councils face 'financial failure'

Two in five councils in England could see their reserves drop to less than 5% of their net revenue expenditure within the next five years, new study finds.

Two in five local authorities in England could see their reserves drop to less than 5% of their net revenue expenditure within the next five years, new analysis has found.

The study by Grant Thornton UK LLP found that reaching this low level of reserves – described by the firm as ‘financial failure' – is a risk for more than one in five councils within the next year alone, and a quarter by the end of next year.

Metropolitan and unitary councils are at the highest risk of financial failure this year, followed by London boroughs and district authorities, the research found.

It also uncovered a £9bn funding ‘black hole' facing English councils over the next five years.

Grant Thornton's head of public services consulting, Phillip Woolley, said: ‘There have been calls for councils to use reserves to plug budget gaps but this is not a sustainable solution – reserves can only be used once and are intended to be a safety net, used only in exceptional circumstances.

‘It is critical that a more comprehensive overhaul of both local government finance and models for social care is undertaken to address local councils' deep-rooted financial challenges.'

FINANCE

CCN: Tourist tax would raise more than £200m

By Neil Merrick | 15 July 2025

County councils in England could potentially raise more than £200m each year by levying a £2 per night tax on tourists, according to a study for the County C...

FINANCE

Councils fear riots repeat

By Neil Merrick | 15 July 2025

Councils fear a repeat of last summer’s riots without ‘significant government investment in community cohesion’, a report has found.

FINANCE

Care prevention spending drops by 10%

By Izzy Lepone | 15 July 2025

Overstretched budgets mean that care leaders have been forced to reduce spending on prevention by more than 10% this year, a survey has revealed.

FINANCE

Future-proofing devolution

By Professor John Denham | 14 July 2025

Devolution will need strong statutory underpinning and a long-term, cross-departmental ambition if it is to succeed, say Professor John Denham and Sir David ...

Popular articles by Ellie Ames