Title

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

OBR warns pressures on council finances remain

By Sir Stephen Houghton | 13 March 2026

While the Local Government Finance Settlement represents a welcome step towards fixing local authority finances, the absence of long-term financial stability...

FINANCE

Future Forum: Councils urged to embrace Total Place

By Martin Ford | 12 March 2026

Councils should seize the opportunity presented by ministers’ renewed interest in Total Place, according one of its pioneers.

FINANCE

Future Forum: Reorganisation threat to transformation

By Martin Ford | 12 March 2026

Fears that ambitions to include transformation alongside local government reorganisation may not be realised have been voiced at The MJ’s Future Forum.

FINANCE

The turning point for early help: can April's reforms deliver the change children need?

By Martha Hampson | 12 March 2026

Martha Hampson says that with record investment and a new Family Help model coming in April, there is a rare chance to turn missed moments into meaningful su...

Popular articles by Ellie Ames