Councils struggling to balance the books, new research suggests

Councils are facing a multibillion pound funding gap as they struggle to balance the books, according to new research.

Unison said its study found that four out of every five councils across England, Scotland and Wales are still struggling financially despite modest improvements in local government finances.

Responses to Freedom of Information requests and financial plans from 368 local authorities showed that councils are forecasting a combined funding gap of almost £4 billion in 2027/28, rising to £7.1 billion by the following year.

The union said staff should receive fair pay local government should have sustainable funding.

Councils lack the resources to restore public services amid rising demand for services such as adult social care, special educational needs and disabilities (Send) and housing, said Unison.

At least 35 councils required more than £1.5 billion of emergency support in 2026/27 to help them set balanced budgets – a legal requirement, but emergency support often involves borrowing which needs to be repaid, said the report.

The 2026 London local elections saw millions of voters across the capital head to the polls

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Unison said its research showed that London faced the largest collective funding gap (£851 million), followed by the South East (£785 million).

Unison general secretary Andrea Egan said: “The figures suggest councils are moving in the right direction, but stabilisation is not recovery.

“Four in five local authorities are struggling to balance the books and there’s still a predicted £4 billion black hole in local government’s finances next year.

“Prime Minister Andy Burnham’s Government has rightly put devolution and stronger local services at the centre of plans for national renewal.

“Councils now need certainty about their future and the long-term funding to invest in prevention and support workers delivering services.

“Staff have experienced years of pay restraint while helping communities through austerity, the pandemic and the cost-of-living crisis.

“Fair pay for staff and sustainable funding for local government are not competing priorities.

“Councils now need both if they’re to recruit and retain the skilled workforce communities depend on.”