Thirty councils in severe financial distress granted support to protect services
The Government has confirmed that 30 councils facing exceptional financial hardship will be given additional support to protect services and ensure their sustainability.
The struggling authorities were informed on Thursday that they have been granted financial flexibilities through a process known as “capitalisation”, which enables them to borrow money or sell assets to meet day-to-day revenue costs.
But for the first time councils have been instructed not to dispose of community and heritage assets to balance their books.
The Ministry of Housing, Communities and Local Government (MHCLG) confirmed that more councils had requested exceptional financial support this year than since the process was established in 2020.
The Government has now removed a 1% premium previously applied to borrowing from the Public Works Loan Board.
Instead, the MHCLG said officials will “work with councils on improvement and actions they can take to help manage their position to ensure value for taxpayer money”.
Local government minister Jim McMahon said: “We are under no illusion of the state of council finances and have been clear from the outset on our commitment to get councils back on their feet and rebuild the foundation of local government.
“We are working with local leaders, encouraging councils to come in confidence where needed to seek help and be assured we will offer a relationship of partnership – not punishment – in our joint mission to improve public services for communities and create economic stability as set out in our Plan for Change.”
The MHCLG said increases in the accessible money were only agreed on “an exceptional basis”.
Not all requests for support were granted and no request was agreed to in its entirety.
Additional increases in permitted capitalisation were only permitted where councils had lower levels of existing council tax compared with similar councils, the department added.
The Government has consulted on reforms to the local government funding model which it said will distribute money more fairly.
This would be “based on an updated assessment of need, enabling every council to deliver high-quality services to their communities”, it added.
The Government has also pledged to provide the first multi-year settlement in a decade in 2026-27 “to provide certainty and economic security to councils setting budgets”.
Analysis by the PA news agency found the vast majority of councils have signalled they will apply a maximum council tax increase of at least 4.99% this year.
Figures for the 139 top-tier authorities in England that have proposed or confirmed increases so far show 85% are planning a rise just short of 5% – the threshold that would trigger a local referendum in normal circumstances.
The local government finance settlement for 2025-26 included more than £69 billion for local government, a 6.8% cash terms increase in councils’ Core Spending Power on the previous year.
The full list of councils granted exceptional support, including the additional amounts they will receive in 2025-26 and to cover previous years, are as follows:
- – Barnet: £55.7 million
- – Birmingham: £180 million (support agreed for 2024-25 has been revised to £490.0 million from £685 million)
- – Bradford: £127.1 million
- – Cheshire East: £25.3 million (support agreed for 2024-25 has been revised to £17.6 million from £6 million)
- – Croydon: £136 million (support agreed for 2023-24 has been revised to £50.0 million from £63.0 million, and support for 2024-25 has been revised to £51 million from £38 million)
- – Cumberland: £23.439 million
- – Eastbourne: £2 million
- – Enfield: £10.0 million (£20 million support agreed for 2024-25)
- – Halton: £32.0 million (£20.8 million support agreed for 2024-25)
- – Haringey: £37.0 million (£28 million support agreed for 2024-25)
- – Havering: £88.0 million
- – Lambeth: £40.0 million (support for housing revenue account)
- – Medway: £18.484 million (support agreed in-principle for 2024-25 has been revised to £23.171 million from £14.742 million)
- – Newham: £51.2 million (£16.0 million support agreed for 2024-25)
- – Nottingham: £25.0 million
- – Shropshire: £26.9 million
- – Slough: £15.709 million
- – Solihull: £32.658 million (£15.615 million support agreed for 2024-25)
- – Somerset: £63 million (provisionally includes revised support agreed in 2024-25, subject to final confirmation)
- – Southampton: £89.9 million (provisionally includes revised support agreed in 2024-25, subject to final confirmation)
- – Stoke-on-Trent: £16.8 million
- – Swindon: £14.7 million
- – Thurrock: £72.0 million (support agreed in principle for 2022-23, this has been revised to £130.0 million from £40 million agreed in February 2024. For 2023-24, this has been revised to £184 million from £234.5 million agreed in February 2024. For 2024-25, this has been revised to £96 million from £68.6 million agreed in February 2024)
- – Trafford: £9.6 million
- – West Berkshire: £3.0 million (£13.0 million support agreed for 2024-25)
- – Windsor & Maidenhead: £41.0 million (£62.0 million support agreed for 2024-25)
- – Wirral: £7.5 million (£20.0 million support agreed for 2024-25)
- – Woking: £74.6 million (For support agreed for 2024-25, this has been revised to £93.6 million from £95.6 million)
- – Worcestershire: £33.6 million
- – Worthing: £2.0 million
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