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

Budget: The effects on combined and strategic authorities

By Tiffany Cloynes | 05 December 2025

Tiffany Cloynes looks at at the financial implications of the Budget for combined authorities and strategic authorities. She says that while the introduction...

FINANCE

The final 15%: Why reaching every home with gigabit broadband matters

By Gráinne Gilmore | 05 December 2025

Gráinne Gilmore says the chancellor’s announcement of historic fiscal devolution – including £13bn of integrated settlements - gives local leaders unprecede...

FINANCE

Future Forum North: Councils urged to take 'grown up' approach to partnership boundaries

By Paul Marinko | 05 December 2025

Councils have been urged to take a ‘grown up’ approach and ‘lean into’ the boundaries that work for them as devolution advances.

FINANCE

Should citizens trust government AI without transparency?

By Ray Eitel-Porter | 05 December 2025

Ray Eitel-Porter says the UK Government is right to see AI as a driver of public service transformation and economic growth. ‘But these benefits can only be ...

Popular articles by Ellie Ames