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Local councils face tough spending decisions to fill £3.5bn funding hole

Local councils have a hole in their finances exceeding £3.5 billion collectively for the coming financial year, according to a report by trade union Unison.

The figures, based on information gathered from local authorities across the UK, prompting Unison to warn that many authorities will be forced to slash services such as waste collection, libraries and leisure centres.

The list is headed by Birmingham City Council, which is £164 million short of its spending needs for next year, followed by Thurrock Council with a gap of £157m. Both councils have effectively declared themselves bankrupt in recent months after issuing section 114 notices.

Other authorities with severe cash shortfalls include Hampshire County Council with a shortfall of £82m, Sheffield City Council with £72.7m and Bradford City Council with £72m.

In total, some 114 councils (31 per cent) are at least £10m short of their planned spending requirements, while 15 (4 per cent) are as much as £40m adrift.

The situation is set to worsen too with the cumulative funding gap rising even further in 2025/26 to over £7bn, warns Unison.

Most are responding to the crisis by cutting services and activities, including:

  • Hampshire is reviewing its school crossing patrols, putting up to 45 jobs at risk.
  • Woking has put 350 workers across the authority on notice of redundancy.
  • Kirklees has said it plans to axe 250 jobs between October and next March.
  • Kent is considering the closure of 37 children’s and youth centres across the county.
  • York is looking at the introduction of charging for domestic garden waste collections, pushing up the cost of car parking across the city and reducing spending on highway maintenance.  

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