The financial landscape for local government has rarely been more challenging. Across England, councils are navigating a complex combination of rising service demand, constrained funding and increasing cost pressures.
Recent analysis by CIPFA has identified a growing body of evidence highlighting the underlying causes of recent Exceptional Financial Support (EFS) requests. The 35 councils receiving EFS in 2026/27, totalling £1.5bn, are in fact not all isolated cases of poor financial management as perhaps some would like us to believe. Instead, these instances reflect broader, systemic pressures across the local government sector.
CIPFA's findings shed light on specific pressures, and while challenges around governance decision making and financial management still exist, our recent work highlights other more dominant issues.
Demand-led pressures particularly in adult and children's social care continue to dominate, reflecting both demographic change and increasing complexity of need. Indeed, social care alone is cited as the primary pressure in 60% of EFS cases, often requiring substantial additional support to maintain statutory provision.
Against this backdrop it is perhaps timely to recognise that the policy environment is constantly shifting. Debate in Westminster about the provision of social care continues to evolve, and new Prime Minister Andy Burnham reiterated the case for more radical reform of social care funding. Burnham has also emphasised the urgency of change. Specifically, he said he intends to fast-track the Casey Commission's review of adult social care, bringing the original 2028 reporting deadline forward.
Such signals point to the potential for significant reform. Depending on policy decisions, funding changes could reduce the financial burden for many councils.
CIPFA has consistently highlighted the need for fundamental reform of social care, recognising it as a primary driver of financial pressure for local authorities. In CIPFA's recent national care services series, we support a more sustainable, long-term funding solution, emphasising clarity over responsibilities, integration with health and national consistence. These principles align closely with proposals for a National Care Service.
Alongside social care, councils face pressures from homelessness and SEND. CIPFA's findings found that 14% of councils cite homelessness as a primary driver and 60% identify SEND pressures as a significant secondary factor. While the newly announced support for SEND may reduce this percentage in the future, at the current time it is a real and very present danger for authorities.
What is increasingly clear is that financial difficulty rarely stems from a single issue. It is the cumulative effect of multiple pressures – demand growth, limited tax flexibility, high borrowing costs and reduced reserves that undermines resilience.
Our analysis clearly supports this conclusion when drilling into secondary drivers. We identified that transformation and savings delivery risk was a prominent feature of EFS discussions, with 70% of councils including this in their submissions. In many cases, transformation programmes were also overly ambitious or misaligned with organisational capacity, creating a risk that planned savings would not be delivered within the required timescales.
One outcome of our analysis is that encouragingly, fewer authorities now cite commercial failure as a driver of EFS. Only 14% identified income or commercial pressures – this could be taken as an indication that there is an improvement in risk awareness and governance.
Looking ahead
The continued reliance on EFS by some authorities demonstrates that financial pressures are not easily resolved. However, there are examples of councils stabilising their position and reducing their dependence on support. Not as many as we would like to see, but at least a couple of councils have moved out of EFS.
The lesson for the sector remains that good financial management is not simply about balancing budgets. It is about creating the conditions for sustainable public value. This means confronting difficult decisions, planning over the longer term and embedding financial discipline across the organisation. But in a landscape with increasing numbers of no overall control, alongside organisations facing imminent fundamental reorganisation, these tools and tactics are not things that can be taken for granted.
We've found that authorities that respond positively to financial challenges tend to share common characteristics. They develop realistic and deliverable savings programmes, strengthen oversight through effective audit and scrutiny and ensure transparent reporting to elected members.
CIPFA's work across assurance reviews and expertise in building resilience maintains that these practices build confidence both internally and externally and enable more informed decision-making and better organisational grip.
While this analysis may have limited immediate impact on the current EFS cohort, it is vital that we continue to deepen our understanding of the factors behind the headlines.
By strengthening our evidence base, building insight and sharing learning across the sector, we are better equipped to support organisations in achieving long-term financial resilience.
Joanne Pitt, senior policy manager, CIPFA
