Councils in England face £9.3bn shortfall in two years, warn University of Cambridge researchers

Councils in England face a £9.3billion funding shortfall by 2026-27, according to researchers in Cambridge and Newcastle.

The three-year economic forecasts councils are required to publish – known as medium term financial strategies – show that 96 per cent of councils estimate a funding shortfall in two years.

Only 14 of the 317 councils in the country say they will be able to balance their budgets or be in a surplus, with the remaining 303 expected to increase taxes, raise other revenue sources and reduce services by 2026-27.

A report from the Bennett Institute for Public Policy at the University of Cambridge and Newcastle University’s Centre for Urban and Regional Development Studies says large county councils with responsibilities over high-cost services such as social care and special educational needs must find £1.7bn by 2026-27, equivalent to £79m for each authority.

And smaller district councils with responsibilities for housebuilding and homelessness must find more than £800m by 2026-27, equivalent to £5m per authority,

Jack Shaw, affiliated researcher at the Bennett Institute for Public Policy and co-author of the report, said: “Councils are in historically unprecedented territory, with many of them now forced to provide skeleton services to meet their legal responsibilities and even then are still at risk of falling over.”

Prof Andy Pike, Henry Daysh chair of regional development studies at the University of Newcastle’s Centre for Urban and Regional Development Studies and co-author of the report, said: “The Conservatives bear substantial responsibility for the situation England’s councils are having to confront following over a decade of austerity, but it is the Labour Government that is now responsible for addressing those challenges. Nothing short of radical change will protect critical services for local residents and taxpayers.”

As the Cambridge Independent has reported, Cambridge City Council needs to save £6m annually by April 2026 to balance its books, while Cambridgeshire County Council is looking to close five of its offices as part of its cost-cutting measures.

Visit the Bennett Institute website to read the full report.