Almost half of local authorities responsible for delivering crucial social care services are bracing themselves to seek emergency financial assistance from the government within the next three years, a new survey reveals.
This stark projection signals a deepening crisis for essential public services, threatening to undermine support for the most vulnerable.
Despite recent increases in funding and the stability offered by three-year financial settlements, councils report that escalating demand and rising operational costs are expected to jeopardise frontline provisions.
The Local Government Association (LGA) warns this will inevitably impact neighbourhood services, reduce investment in preventative measures, and intensify pressure on those who rely heavily on local support, leaving communities feeling neglected.
The LGA’s survey found that 34 per cent of all councils across the country have either already applied for, or are likely to seek, exceptional financial support (EFS) in at least one financial year up to 2028-29.
This figure rises sharply to 47 per cent when focusing solely on upper-tier councils, which bear the primary responsibility for adult and children’s social care.
EFS mechanisms allow councils to cover day-to-day expenditures through borrowing or by utilising capital receipts, with some even granted permission to exceed the standard 4.99 per cent council tax increase limit.
The government is due to publish its final settlement for councils for 2026-27 on Monday, but many local authorities fear their finances will be hit by proposed changes to funding allocation, following a review aimed at redirecting resources to poorer areas.
The LGA insisted the EFS process is not a sustainable way of managing council finances and addressing gaps in funding.
The survey also showed that 69 per cent of all councils said it will be difficult to set a balanced budget, as required by law, in 2026-27.
When financial officers were asked how confident they are that their council will have sufficient funding to fulfil all statutory duties in each of the three financial years, 51 per cent said they were not confident, rising to 66 per cent of social care councils.
Commenting on the findings, LGA chairwoman Louise Gittins said: “This research underlines the reality facing councils.
“Councils are doing everything they can to protect the services people rely on but demand and costs continue to rise faster than funding, leaving many with no choice but to consider emergency financial support.
“Short-term fixes will not address these challenges.
“Councils need sustainable funding and reform so they can focus on prevention, growth and delivering the services communities expect.”
The LGA has said that four in five upper-tier councils in England will be pushed into effective bankruptcy by increasing spending on special educational needs and disabilities (Send) without significant reforms to the system.
There are calls for ministers to write off accumulated Send deficits which sit on councils’ books under current arrangements.
The Government is expected to publish an education White Paper on an overhaul of the Send system in the coming weeks.
The LGA said 95 per cent of upper-tier councils are carrying Send deficits, while four-fifths report they have to cut services to secure loans to pay the day-to-day costs of covering Send overspends.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “We inherited an outdated and unfair funding system and we’re taking action to fix this, making almost £78 billion available for council finances next year.
“We are delivering fairer funding, targeting money where it is needed most through the first multi-year settlement in a decade, giving councils greater certainty to plan and invest for the long term.
“This will help councils deliver the high quality public services local people need.”
Unite general secretary Sharon Graham said: “This report must act as a wake up call to government. When councils go bust, it is workers and communities that pay the price.
“Time and again we have seen councils reach for the lever to cut jobs and services. This is austerity by any other name.
“We need real investment in our public services and this must be paid for through a wealth tax and local authority debt relief.”
Rachel Harrison, GMB national secretary, said: “Fourteen years of Tory underfunding has had devastating impacts on local government services and workers.
“This year’s pay offer must be fully funded for all councils and schools to ensure no more services are cut and jobs lost to plug the funding gaps.”
