Councils have found themselves under severe financial pressure after a decade of central government funding cuts under the Conservatives, followed by a spike in inflation and an increased demand for services in recent years.
Windsor and Maidenhead, a borough council led by the Lib Dems, has requested a further 20 per cent increase as part of an application for Exceptional Financial Support from the Government, prompting outrage among locals.
There have already been several high-profile examples of councils having to issue a Section 114 notice meaning a local authority cannot incur any new spending, leading to fierce political debate over allegations of financial mismanagement.
Birmingham had more than £3.3bn of borrowing on its books as of 30 September 2024, according to the Ministry of Housing, Local Government and Communities.
Birmingham council, which serves a population of 1.16million, wants to increase its council tax by 9.99 per cent as part of its drive to get its finances back on track.
The authority, which serves a population of more than 800,000 people, has proposed a 4.98 per cent council council tax hike and warned that “tough decisions” are needed to balance its budget.
‘People are going to stop paying’: inside the town facing a 25% council tax hike
Read MoreThe council recently admitted there have been “significant mistakes” made in the past and apologised to its residents for the failings.
Other councils which have more than £1bn in debt include Edinburgh, Warrington, Glasgow, Newham, Barking and Dagenham, Aberdeen, Manchester, Enfield, Croydon, Cornwall, Fife, Lancashire, Highland, Barnet, Spelthorne and Southwark.
In December, Labour’s financial settlement for local government made £69bn available for councils, a real-terms increase of 3.5 per cent from 2024-25. This included a one-off £600m Recovery Grant for those most in need.
“As a former council leader I know too well that councils have suffered from short-term solutions.
The Local Government Association has also been contacted for comment.
“It is good that the Government has committed to providing councils with multi-year settlements as part of that process, but it must include significant and sustained increases in overall funding for councils.
“However, this alone will not address the multiple issues with the way local services are funded and councils stand ready to work with the Government on creating an improved and a more sustainable future funding system that works for all of local government.”
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