The UK's local administrations are facing a 'significant' threat of 'broad-scale failure'.
In a publication released on Monday, Unison, the largest trade union in the UK, expressed concern that without additional emergency funding to mitigate a projected deficit in the 2025-26 fiscal year, there's a significant risk of widespread collapse in local government services.
The predicted financial hole for local councils is projected to reach an immense £8.5 billion ($11.1 billion) the following year, as per the report, which draws upon publicly accessible financial statements and some councils' estimates of their funding shortfalls supplied to Unison.
This statement comes at a time when the freshly elected Labour government in the UK is set to expose their local government funding strategy in their inaugural budget next month, following the disclosure of a £22 billion ($29 billion) deficit in the nation's finances in July.
Unison anticipates that numerous local government bodies might be forced to sell off property and infrastructure, and trim back on services such as waste management, libraries, and public restrooms to meet their legal obligation to maintain financial equilibrium.
In a speech last month, British Prime Minister Keir Starmer foreshadowed a challenging budget, implying possible tax hikes. "We'll need to make tough choices," he said.
Many UK local governments have grappled with funding shortages over the last decade, in part due to significant reductions in central government funding during the 2010s.
After adjusting for inflation, English councils have witnessed a 9% reduction in "core funding" — a blend of central government funds and local taxes — between 2010 and this year. This translates to a 18% cut per resident as populations have grown, the Institute for Fiscal Studies (IFS) reports.
Birmingham, the second largest city in the UK after London, essentially declared bankruptcy a year ago, halting expenditure except for essential services.
In March, the city's council approved "one of the most extensive local government spending reduction plans in history," as per Unison, including proposals to eliminate up to 600 jobs, scale back social care and children's services funding, and reduce waste collection frequencies.
Unison highlighted that since 2018, eight councils have issued "section 114 notices," signifying financial distress.
"Councils are skating on thin ice financially," Unison general secretary Christina McAnea said in a statement. "Essential services and countless jobs are under threat, with disastrous consequences for communities across Britain... After 14 years of relentless austerity, the very foundation of local society is at risk."
Between 2010 and 2023, councils shuttered 1,243 youth centers and 1,168 children's centers — facilities offering free classes and services to young people and families. The count of public restrooms fell by 1,629 over the same period, and the number of council-operated libraries dropped by 1,376, as per Unison.
As examples of forthcoming reductions, Unison mentioned Shropshire Council in the West Midlands region of England's plans to eliminate up to 540 jobs.
Derbyshire County Council in the East Midlands is considering shutting down up to 11 elderly care homes, while Hampshire County Council in the southeast of England is contemplating halting all funding for homeless support services starting from March next year, Unison added.
In a statement released on Monday, a UK government representative stated, "We will strengthen the foundation of local government."
"We will empower councils to recover by focusing on the basics — providing more financial stability through multi-year funding agreements, abolishing competition for funding pots, and overhauling the local audit system," the representative concluded.
IFS associate director David Phillips, who oversees research on local government finance at the institute, cautioned that the method councils utilize to calculate future funding requirements and consequently gaps was "murky" and likely to differ among authorities.
The UK government's strategy for local government funding, to be revealed in the inaugural budget next month, could significantly impact the business operations of local councils. Unison warns that without adequate funding, local government bodies may be forced to sell off assets and cut back on essential services, which could lead to economic instability in these areas.
