Alarm bells over council finances as one in four expected to need government help to avoid meltdown

The details, from a survey of council chief executives, come amid major concerns over Shropshire Council's financial position, with the authority in the midst of a drastic programme of funding cuts in an effort to avoid financial meltdown.

The Local Government Association (LGA) is calling on the Chancellor to take "immediate action" in the Autumn Budget to stabilise council finances in a bid to avoid greater damage to local services.

Councillor Louise Gittins, LGA chair, said: "Councils are the backbone of communities. Every day they strive to protect vulnerable children and families, support our older or disabled loved ones to live independent lives, keep our streets clean and pothole-free and build affordable homes - but this is becoming increasingly difficult.

"The unprecedented emergency support given to councils this year reveals the extraordinary funding emergency facing local government. As our survey shows, many more councils are being pushed into a precarious financial position.

"This is not just about numbers on a spreadsheet. Budget cuts needed to plug growing funding gaps will affect the most vulnerable members of society and the services our communities rely on every day.

"The Autumn Budget must provide councils with the financial stability they need to protect the services our communities rely on every day."

Shropshire Council's finances have been the subject of increasing focus, with recent research showing its planned cuts are the worst in the country.

Analysis of the council's perilous financial position showed that the authority is planning to make the most savings of any council in England per person – £191 for each person.

The figures came from questions to councils across England – with 131 out of 153 responding.

The data showed that out of the 131 authorities to respond Shropshire Council is planning to make the most savings in the country as a proportion of its net revenue budget – with a total of £62m of cuts.

The analysis comes after the council's own latest financial reports predict it being a staggering £37m over budget by the end of the year.

The LGA's survey comes as more than 1,500 councillors, council leaders, senior officers, politicians and organisations gather for the start of the LGA’s Annual Conference in Harrogate.

The organisation says it wants to "work with government" to ensure councils receive multi-year finance settlements – and wants a cross-party review set up into how the local government funding system should be reformed.

An unprecedented 18 councils were given Exceptional Financial Support (EFS) from the Government in February to help meet their legal duty to balance their books this year – 2024/25.

This includes them being given permission to use capital funds raised through borrowing, or the sale of assets such as land and buildings, to plug funding gaps in their day-to-day revenue spending.

The LGA said: "While this approach can provide temporary financial relief, there is a risk that EFS could potentially load already struggling councils with further debt and costs in the future and/or undermine future capital programmes."

The organisation's survey says that one in 10 councils this year say they have discussed the possibility of requesting EFS from the Ministry of Housing, Communities and Local Government, while 25 per cent are likely to apply for EFS in 2025/26 and/or 2026/27 without additional government funding.

It said that 44 per cent of councils with social care responsibilities said that they are likely to apply for EFS in 2025/26 and/or 2026/27 without additional government funding.

Councils were asked to identify their top five pressures.

Social care authorities identified children's social care – 93 per cent, adult social care – 90 per cent, SEND services – 80 per cent, school transport – 65 per cent, and homelessness – 64 per cent.

For shire districts, homelessness – 85 per cent, and waste services – 82 per cent, were top concerns.