England & Wales Press Releases

LGIU warns all political parties not to underestimate the financial crisis facing councils as more bankruptcies loom

Today, the Local Government Information Unit (LGIU) has released its 2024 General Election manifesto analysis and an easy-to-read guide on how party policies compare and contrast in relation to the local government sector. With two weeks until the General Election, we delve into the future for local government.

The LGIU welcomes the broad political support for devolution and believes that decisions should be made at the lowest possible level of government, with bespoke devolution deals best equipped to deliver aspirations of residents. As outlined in the LGIU’s For the future of local government manifesto, devolution can provide cost-effective, locally-needed public services that simultaneously drives community engagement and participation by allowing citizens to have a more direct influence on decisions that affect their daily lives.

However, our manifesto analysis reveals that all parties have underestimated the financial crisis in local government and urgent action is needed if we are to avoid hundreds of councils plunging into effective bankruptcy.

LGIU research shows more than half of local authorities could declare effective bankruptcy in the next five years, and nearly one in ten (9%) within this financial year.  Earlier this year, 19 councils were granted permission to sell local assets worth hundreds of millions of pounds and borrow more to balance the books. Without additional funding or the ability to raise their own funds, councils will plunge further into debt irrespective of who is in Downing Street.

And, it is vital for democracy that trust is rebuilt between citizen and state while manifesto commitments are delivered. Recent LGIU research (with Ipsos) has revealed a significant disconnect between citizens and the institutions meant to serve them, with only a quarter of adults aged 18-75 placing their trust in the Government and the national media to act in the best interests of local communities.

We believe that soon-to-be-elected local politicians and a new national government must work together to rebuild trust and confidence in our political structures. This has to include reform of local government systems.

Local authorities must be given the autonomy to shape policy decisions to local circumstances and local needs and be supported by a funding mechanism that means those decisions can be financed effectively and sustainably. Only then can we begin to convince people that government and politicians at all levels have the best interests of local communities at heart.

Jonathan Carr-West, Chief Executive, LGIU said: “National success has local foundations and the next government needs functioning local authorities to deliver its national mandate.

“However, with half of all councils expected to go bankrupt within the next government’s first term, none of the parties’ manifestos adequately address the urgent financial crisis in local government.

“Councils are the part of government with the most impact on our daily lives and the places we live. Since 2018, eight councils have already gone bust resulting in residents’ council tax doubling while public services are decimated.

“That is why the LGIU is calling on all parties and candidates in the upcoming 4 July UK general election to commit to saving local government by providing it with sustainable funding.

“The many pressures and challenges facing the next government – from housing to social care to record levels of public distrust – can only be tackled in partnership with a resilient, sustainable local government sector.

“It’s time to listen to those who know the sector best. Our proposed reforms have been developed from a decade of solutions-focused research and in-depth consultation with leaders and chief executives in UK local government. Many of them can be implemented within the first 100 days of a new government. All of them are proven to work.”