A report by Reform, a public services think tank, has heavily criticised Britain’s local governmental structures, citing chronic ‘underfunding and overcentralisation’ of the system.
The report asserts that without significant change, local authorities will continue to face escalating crises that undermine their ability to serve their communities effectively.
In the last six years, eight local councils have issued eleven Section 114 notices – effective declarations of bankruptcy – and 19 councils have been provided with Exceptional Financial Support (EFS) packages during the 2024-25 financial year.
The London council of Croydon has alone issued two notices in the last 4 years.
Since the 2000s, the demands on local services have grown whilst central government funding has fallen in real terms.
Local Government Association (LGA) analysis suggests that one in five local councils are likely to need to issue a Section 114 under current conditions.
Labour’s autumn budget announced over £4 billion in additional funding for local government services. The Local Government Finance Settlement seeks to ensure that local governments will receive a real-terms increase in core spending power of around 3.2%.
Sean Eke, researcher for Reform, says that the budget proposals are certainly welcome but questions ‘whether this is enough’. The report argues that the UK, as one of the most fiscally centralised countries in the OECD, has a detrimental effect on local councils. Sean concludes that ‘moving to a more fiscally devolved system would improve incentives and provide greater certainty to local authorities’.
One of the fastest growing expenditures for local councils in the UK is housing and homelessness costs. According to the Department for Levelling Up, Housing and Communities, council spending on nightly temporary accommodation almost tripled from 2021-2023. The most recent census states London contains about a quarter of the nation’s homeless population, creating a large funding.
29 of the 33 councils in the capital overspent on their homelessness budgets between April 2023 and April 2024.
Newham City Council has the highest rate of homelessness (1 in 20 people) in London and has sought EFS this year in order to handle increasing ‘challenges with temporary accommodation’.
The report’s recommendations for the future of local governance include reform of the local government funding model to ensure greater fiscal autonomy and sustainability, as well as the updating of grants and the information that informs their funding.
Submitted Article
Headline
Short Headline
Standfirst
Published Article
HeadlineLeading UK think tank levels criticism at council finances
Short HeadlineLocal government system at ‘financial breaking point’
StandfirstThink tank Reform has made recommendations to the government over its structural failings within the local government system.
A report by Reform, a public services think tank, has heavily criticised Britain’s local governmental structures, citing chronic ‘underfunding and overcentralisation’ of the system.
The report asserts that without significant change, local authorities will continue to face escalating crises that undermine their ability to serve their communities effectively.
In the last six years, eight local councils have issued eleven Section 114 notices – effective declarations of bankruptcy – and 19 councils have been provided with Exceptional Financial Support (EFS) packages during the 2024-25 financial year.
The London council of Croydon has alone issued two notices in the last 4 years.
Since the 2000s, the demands on local services have grown whilst central government funding has fallen in real terms.
Local Government Association (LGA) analysis suggests that one in five local councils are likely to need to issue a Section 114 under current conditions.
Labour’s autumn budget announced over £4 billion in additional funding for local government services. The Local Government Finance Settlement seeks to ensure that local governments will receive a real-terms increase in core spending power of around 3.2%.
Sean Eke, researcher for Reform, says that the budget proposals are certainly welcome but questions ‘whether this is enough’. The report argues that the UK, as one of the most fiscally centralised countries in the OECD, has a detrimental effect on local councils. Sean concludes that ‘moving to a more fiscally devolved system would improve incentives and provide greater certainty to local authorities’.
One of the fastest growing expenditures for local councils in the UK is housing and homelessness costs. According to the Department for Levelling Up, Housing and Communities, council spending on nightly temporary accommodation almost tripled from 2021-2023. The most recent census states London contains about a quarter of the nation’s homeless population, creating a large funding.
29 of the 33 councils in the capital overspent on their homelessness budgets between April 2023 and April 2024.
Newham City Council has the highest rate of homelessness (1 in 20 people) in London and has sought EFS this year in order to handle increasing ‘challenges with temporary accommodation’.
The report’s recommendations for the future of local governance include reform of the local government funding model to ensure greater fiscal autonomy and sustainability, as well as the updating of grants and the information that informs their funding.
