FINANCE

Inflation pushes councils' shortfall up by £1bn

English councils face a funding gap of £4bn over the next two years, new Local Government Association research has found.

English councils face a funding gap of £4bn over the next two years, new Local Government Association (LGA) research has found.

The shortfall has increased by £1bn since the LGA's analysis in July as it now accounts for the Bank of England's August inflation forecast.

By 2024-25, the LGA found the cost of delivering council services will have gone up by £15bn in the three years since 2021-22.

Chair of the LGA's resources board, Pete Marland, said: ‘Councils remain firmly in the eye of the inflationary storm, and severe funding and demand pressures mean that council finances are under pressure like never before.

‘The easy savings have long since gone.

'Councils are faced with tough decisions about cutting valued services, and increasing council tax and fees and charges during a cost of living crisis.'

A Department for Levelling Up, Housing and Communities spokesperson said: 'We have made £5.1bn of extra funding available to local authorities through the local government finance settlement, making almost £60bn available for the sector – up 9.4% on cash terms on 2022-23.

'We continue to monitor pressures on all councils and stand ready to talk to any council that is concerned about its financial position.'

FINANCE

The secret ingredient is community crowdfunding

By Frank Kibble | 27 June 2025

In London Climate Action Week, Frank Kibble explains how everyday climate activism is being being funded by communities - with support from their council.

FINANCE

How to make leadership radical, capable and agile

By Kim Wright | 27 June 2025

With the LGA Conference on 1-3 July imminent, Kim Wright – who will speak at the event – says investing in the best local government leaders is a necessity a...

FINANCE

The power of the dream

By Jon Rouse | 27 June 2025

Jon Rouse says that rather than being a bureaucratic exercise, reorganisation is about complete reinvention of what the state exists to do – enabling communi...

FINANCE

We're ready to lead

By Joanna Killian | 27 June 2025

Ahead of the LGA Conference, Joanna Killian says the sector should take confidence in how far it has come and the potential that lies ahead, and that its fut...

Popular articles by Ellie Ames