Local governments across England, Scotland and Wales face a £4.3 billion (A$8.4 billion) hole in their finances in the coming year which could force deep cuts to jobs and services, according to a new report from the UK’s biggest union Unison.
The Unison report, which said the funding gap could balloon to £8.5 billion in 2026, claimed there was a “serious risk of the widespread collapse of local government.”
“Councils are teetering on the brink of financial disaster,” Unison general secretary Christina McAnea said in a statement.
“Countless essential services and very many vital jobs are at risk, with terrible consequences for communities across Britain… After 14 years of ruthless austerity, the very fabric of local society is under threat.”
Unison noted that since 2018, eight councils have issued so-called section 114 notices, meaning they are effectively bankrupt.
The most high profile failure has been in Birmingham, the UK’s second largest city, where the council declared bankruptcy last year and halted spending except on essential services.
In March, the council announced it would be forced to cut 600 jobs and slash services such as social care, children’s services, and waste collection.
The Unison report detailed other austerity measures, such as plans by the Shropshire Council to cut up to 540 jobs, and the proposed closure of 11 aged care homes by the Derbyshire County Council. The Hampshire County Council has proposed cutting spending on support for homelessness.
Between 2010 and 2023, councils closed some 1243 youth centres and 1168 children’s centres, while the number of public toilets dropped by 1629 over the same period, and the number of council-run libraries fell by 1376.
The report is based on publicly available financial statements and some councils’ own estimates, and comes as the Labour government prepares to unveil plans for local government funding in its first budget next month, after revealing a £22 billion “black hole” in the nation’s finances in July.
Many of the UK’s local governments have faced chronic funding shortfalls over the past decade, partly as a result of funding cuts from the central government over the last decade.
After accounting for inflation, English councils have lost 9% in “core funding” between 2010 and 2024, according to analysis from think tank the Institute of Financial Studies. After factoring in population increases, this amounted to a cut of 18% for each resident.
