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Councils across England, Scotland and Wales face potential cuts of £4bn for the coming financial year, “way beyond” any previous estimates, according to research by the Unison union published today.
The new figures from the UK’s largest union is based on information from local authorities, and shows council funding is in a “dire state” with massive cuts likely to essential services and jobs.
The report, Councils on the Brink, warns that failure to rectify the growing problem soon risks “the widespread collapse of local government”. It’s published to coincide with the Trades Union Congress in Brighton.
It piles pressure on the new Labour Chancellor, Rachel Reeves, to avoid further cuts in her first major decision-making test, the Government’s first budget on October 30th.
Many authorities could be forced to sell land, buildings and other capital assets, as well as cut back vital community services like rubbish collection and recycling, libraries, public toilets and leisure centres even further, Unison warns.
According to the union’s research, the five councils with the biggest projected shortfalls for 2025/26 account for a half-billion pound funding gap. These are Hampshire County Council (£132m), Bradford City Council (£126m), Birmingham City Council (£119m), Somerset Council (£104m) and Leicester City Council (£90m).
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Many local authorities have already made, or are planning, further cuts to services in an attempt to balance the books ahead of their budget-setting meetings in February and March 2025.
These come on top of well over a decade of major cuts and include:
- Derbyshire County Council proposes to close up to 11 elderly care homes and 8 day centres for the elderly.
- Hampshire County Council halving the funding it provides for wellbeing centres. These provide support for people recovering from mental health issues.
- York City Council asking residents how to cut £30m over the next three financial years, and Kent County Council launched a public consultation into tens of millions of pounds of savings
- Shropshire Council cutting up to 540 jobs and planning to end the 24/7 provision of CCTV monitoring
- Nottingham City Council planning to close four public libraries.
- Peterborough City Council recently halving its funding to a dementia resource centre
Byline Times has also reported on dozens of councils selling-off the “family silver” – local assets owned by the taxpayer but soon to be offloaded to private buyers.
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In the Red
The growing disparity between the funds local authorities require and what they actually have available to spend is forcing them to make drastic cuts to vital services and jobs, which Unison warns could have devastating and wide-ranging consequences for communities.
For instance, Hampshire County Council intends to eliminate all funding for homelessness support services throughout the county starting from March 2025.
This March, Birmingham City Council, the largest local authority in Britain, approved one of the most extensive local government cost-cutting plans in history. This includes proposals to eliminate up to 600 positions, significantly reduce funding for social care and children’s services, and cut back on waste collection services.
As Middlesbrough Council attempts to save an additional £21m by 2026/27, it has allocated £3.6m for future redundancies. East Riding Council has informed its employees that it may eliminate any position that has been unfilled for more than six months.
Unison warns that without immediate government intervention, the total funding deficit could skyrocket to £8.5bn by 2026/27, leaving many councils struggling to deliver essential local services and safeguard jobs.
Unison’s projections, which are based on freedom of information requests and councils’ own financial forecasts, present a much grimmer outlook compared to others. In England alone, the union claims the funding gap could reach £3.4bn by 2025/26, considerably higher than the £2.3bn forecast published by the Local Government Association for English councils in June.
Bankruptcy Risk
Years of austerity mean services have already been cut substantially, with widespread job losses and a reduction in vital support for some of the UK’s most deprived areas.
Many local authorities are now on the brink of financial collapse and the union says this new data suggests “many more” could soon follow suit.
Since 2018, eight councils – including Birmingham – have issued so-called Section 114 notices, meaning they risk failing to meet the legal requirement to balance their books.
Unison’s data also reveals the local authorities facing the biggest predicted funding gaps relative to their annual budgets. While unitary or county councils delivering vital adult care and children’s services remain under enormous pressure, the huge financial strain on many district councils is even more apparent when measured this way.
At Eastleigh Borough Council, the estimated £4.9m funding gap for 2025/26 represents 37% of its £13.1m annual revenue budget. Other councils where predicted shortfalls represent a considerable proportion of day-to-day spending plans include Rushmoor Borough Council (35%) and Thurrock Council (31%).
Thurrock issued a Section 114 notice in 2022 amid a financial emergency caused partly by a high-risk investment strategy and a £469m budget deficit. The authority was later subject to government intervention.
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Largest council funding gaps as % of day-to-day spending plans for next year (net revenue budgets):
| Council | 2025/26 Funding Gap £ | Services (Revenue) Budget 2025/26 | % of Budget Funding Gap Represents |
| Eastleigh Borough Council | £4,879,000 | £13,115,000 | 37% |
| Rushmoor Borough Council | £4,127,000 | £11,920,000 | 35% |
| Thurrock Council | £18,200,000 | £59,000,000 | 31% |
| Tamworth Borough Council | £3,262,000 | £11,605,000 | 28% |
| Cherwell District Council | £7,038,000 | £29,024,000 | 24% |
| Mole Valley District Council | £2,500,000 | £10,384,000 | 24% |
| Shetland Islands Council | £48,880,605 | £205,910,186 | 24% |
| Bradford City Council | £126,200,000 | £575,300,000 | 22% |
| Mansfield District Council | £3,626,000 | £17,532,000 | 21% |
| Woking Borough Council | £4,874,000 | £23,846,000 | 20% |
Unison general secretary Christina McAnea said: “Councils are teetering on the brink of financial disaster. Countless essential services and very many vital jobs are at risk, with terrible consequences for communities across Britain.
“After 14 years of ruthless austerity, the very fabric of local society is under threat. Councils are quite simply the linchpin of local areas, so when services go, many people are left vulnerable, with no one to pick up the pieces.”
She added that Local authorities were “clobbered” by the previous government, whose “harsh financial settlements left councils with no option but to sell off the family silver, auction off green spaces, close key community facilities and let thousands of workers go.”
The union leader issued a call to the Labour Government to act fast. “Tough as the financial situation may be, ministers cannot ignore the terrible plight of authorities of every political persuasion,” McAnea said.
The data was gathered through freedom of information requests collated between May and early September 2024 and an analysis of councils’ published financial strategy documents.
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Largest Funding Gaps by Size (£):
| Council | 2025/26 Funding Gap £ | Services (Revenue) Budget 2025/26 | % of Budget Funding Gap Represents |
| Hampshire | £132,000,000 | £1,200,000,000 | 11% |
| Bradford | £126,200,000 | £575,300,000 | 22% |
| Birmingham | £118,855,000 | £1,181,752,000 | 10% |
| Somerset | £103,900,000 | £691,700,000 | 15% |
| Leicester | £90,400,000 | £462,300,000 | 20% |
| Kent | £81,398,200 | £1,494,108,300 | 6% |
| Surrey | £74,800,000 | £1,284,500,000 | 6% |
| Nottingham* | £68,710,000 | £357,000,000 | 19% |
| Cornwall | £67,111,000 | £845,999,000 | 8% |
| Leeds | £64,600,000 | £641,400,000 | 10% |
Responding to the report, a Government spokesperson said: “This government will fix the foundations of local government and work closely with the sector to do so.
“We will get councils back on their feet by getting the basics right – providing more stability through multi-year funding settlements, ending competitive bidding for pots of money and reforming the local audit system.”
Ministers claim “difficult decisions” are being made across government to plug a £22bn “black hole” in the public finances from the previous government.
But Minesh Parekh, a Labour councillor in Sheffield, told Byline Times that after fourteen years of local government austerity “there is very little left to cut.”
“The yearly search for council budget ‘savings’ must come to an end. Requiring local authorities to find millions to offset rising social care costs is clearly unsustainable.
“We need to see real political leadership on this issue, including a new way of financing councils that increases core grant funding, redistributes more resource to poor areas, and gives councils with new powers to tackle local issues. Whitehall needs to stop treating councils as a problem to be managed and instead look to us as a way to build stronger communities.”
Aid Cuts Looming
The warning over council finances comes as the UK’s leading network for international development organisations has revealed that cuts are not just taking place at home.
Without “urgent government action” in the autumn budget, the UK’s overseas aid budget faces significant cuts in the coming year, the NGO Bond has found.
According to the non-profit, UK ODA is expected to fall to just 0.36% of Gross National Income (GNI) in 2024, the lowest level since 2007, when refugee costs – such as housing asylum seekers in the UK – are excluded. The last Government increasingly (and controversially) assigned sky-rocketing Home Office costs associated with housing refugees to the ‘overseas’ aid budget, which meant less has been available for aid work abroad.
The briefings highlight that the aid budget has been under severe pressure in recent years due to cuts and increased spending on housing refugees and asylum seekers in the UK.
Bond is calling on the government to take immediate steps ahead of the autumn budget to rebuild the UK’s reputation in international development. These include reducing ODA spending on asylum and refugee costs, reforming how this spending is reported, and truly committing to returning to the 0.7% aid target with fair and transparent fiscal tests.
Bond represents over 350 UK civil society organisations working to eradicate global poverty and inequality.
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