LGA Survey Reveals Many Councils May Need Emergency Funding in Coming Years

More than a third of councils—and nearly half of those responsible for social care—say they are likely to require emergency government bailouts to set balanced budgets within the next three years, according to a new survey from the Local Government Association (LGA).

While funding levels have increased in recent years and multi-year settlements provide some certainty, rising costs and demand pressures continue to outpace available resources. The LGA warns that underfunded local authorities risk reducing neighbourhood services, cutting preventive initiatives, and placing growing strain on those who rely most on local support.

The survey found:

• Almost six in ten councils said setting a balanced budget for 2026/27 will be “fairly” or “very” difficult.

• Eight in ten councils expect to meet minimum legal duties in 2026/27, but only 43% believe they can do so by 2028/29.

• More than a third (34%) have already applied—or are very or fairly likely to apply—for Exceptional Financial Support (EFS) in at least one financial year between 2026/27 and 2028/29.

  
  

EFS arrangements allow councils to cover day-to-day revenue costs through borrowing or capital receipts, and in some cases permit council tax increases beyond current referendum limits. However, the LGA emphasises that these are not a sustainable solution for bridging funding gaps.

The organisation is urging the government to provide a significant increase in resources in the upcoming Local Government Finance Settlement to safeguard council finances, protect services, and enable growth and reform at scale. The LGA also calls for long-term reform of local government finance, including a cross-party review of council tax, business rates retention, and other funding sources.

In addition, councils require clarity on SEND (Special Educational Needs and Disabilities) funding and a credible strategy to address growing high-needs deficits resulting from structural underfunding.

Cllr Louise Gittins, LGA Chair, said: “This research highlights the challenges councils face. Authorities are doing all they can to protect the services people rely on, but rising demand and costs outstrip funding. Many councils have no choice but to consider emergency financial support. Short-term fixes will not solve these challenges. Sustainable funding and reform are essential to allow councils to focus on prevention, growth, and delivering the services communities expect.”