Local authorities are “teetering on the brink of financial disaster”, facing a collective funding shortfall of £4bn for the coming financial year, new research by union UNISON has revealed.
The report, which is called Councils on the Brink, found that authorities across England, Scotland and Wales face a collective funding shortfall of £4.3bn in 2025/26, which will rise to £8.5bn by 2026/27.
Across England alone, the funding gap for the coming financial year is £3.4bn, increasing to £6.9bn in 2026/27. This is higher than estimates by the Local Government Association in June, which projected a financial shortfall of £2.3bn.
According to UNISON’s research, the five councils with the biggest predicted shortfalls for 2025/26, include Hampshire County Council (£132m), Bradford City Council (£126m), Birmingham City Council (£119m), Somerset Council (£104m) and Leicester City Council (£90m).
Christina McAnea, UNISON’s general secretary, said: “Councils are teetering on the brink of financial disaster.
“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. Only swift and decisive action to stabilise local finances will do.”
When looking at authority funding gaps relative to annual budgets, while unitary and county councils are under large pressure due to adult and children’s services, the financial strain on districts is more apparent, according to UNISON.
For example, Eastleigh Borough Council’s estimated funding gap of £4.9m for 2025/26 represents 37.2% of its £13.1m annual revenue budget. Other councils where predicted shortfalls represent a considerable proportion of their spending include Rushmoor Borough Council (34.6%) and Thurrock Council (30.9%).
The research also found that councils in Greater London have the highest collective fundings gap as a proportion of their collective net revenue budgets by region.
This comes as a survey by the Key Cities network revealed that city authorities will prioritise service redesign and using financial reserves to address the ongoing financial crisis in municipal government.
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