Officials and senior councillors have expressed greater confidence in the Government’s recent approach to local governance, but financial concerns remain a significant issue, according to a new survey.
There is widespread scepticism across local government regarding the Government’s plans to establish new “super councils” across England. The latest survey conducted by the Local Government Information Unit (LGIU) has found that senior figures in local government are unconvinced that the proposed large unitary authorities will resolve ongoing financial difficulties.
Less than a quarter (23%) of those surveyed believe that large-scale reorganisation will improve the financial situation of councils, and only 20% think the timescales for implementation are realistic. Furthermore, just 10% of respondents feel they have been sufficiently involved in the reorganisation process, while fewer than one in five say the Government has provided adequate clarity on its plans.
Concerns over financial sustainability
The LGIU’s annual survey on council finances paints a bleak picture of the financial stability of local authorities. Only 10% of senior council officials express confidence in the sustainability of local government finances. The overwhelming majority (90%) identify rising demand for services as the greatest pressure on their budgets. Increased national insurance contributions and structural reorganisation have also been cited as significant stressors on already limited financial resources.
The English devolution White Paper, announced by Deputy Prime Minister Angela Rayner in December, outlined the Government’s preference for upper-tier unitary councils. These councils would each serve populations of at least 500,000 and replace the existing two-tier local government system in county areas.
The Government argues that these “super councils” will lead to better public services, financial efficiencies, and provide a framework for devolving more powers to local authorities under mayoral leadership. However, the survey highlights that many in the sector remain unconvinced.
Risk of council bankruptcies
A particularly alarming finding from the survey is that 6% of councils believe they could be forced to declare effective bankruptcy within the current financial year without urgent reforms. Furthermore, 35% predict that they could face financial failure by the end of the decade if the local government system is not fundamentally restructured.
To address these challenges, councils are considering a range of financial measures to balance their budgets. A striking 94% of respondents indicate that they are preparing to increase council tax, while 88% are looking to raise fees and charges for residents. More than one in five respondents say they will resort to increasing borrowing, and nearly two-thirds expect to cut spending on services.
Additionally, 56% of councils plan to use financial reserves this year—an increase from last year—while just under half say they will implement cost-saving measures by restructuring services.
Calls for council tax and revenue reforms
The survey results show strong support for reforming council tax. A significant 77% of respondents favour changes to the system, while three-quarters support increased flexibility to generate revenue through local levies.
Despite widespread financial concerns, satisfaction with the Government’s handling of local government issues has improved compared to last year.
This year, 25% of respondents feel that local government is being appropriately considered in wider policy decisions, compared with just 8% in the previous year. Similarly, 20% are satisfied with the transparency of Government decisions related to local government finances, up from just 4% last year. Additionally, 30% believe the Government understands the scale of financial challenges facing councils, a notable increase from 6% in the previous survey.
The LGIU has urged the Government to grant local authorities more fiscal freedoms, such as implementing tourism taxes and local sales taxes, which are common in other countries.
Criticism and defence of the government’s plans
Jonathan Carr-West, Chief Executive of the LGIU, acknowledged improvements in the Government’s relationship with local authorities but stressed that serious financial concerns remain.
He stated:
“To put it bluntly, respondents are not happy with the way that reorganisation is being carried out. The vast majority feel that the Government is not providing enough clarity, enough genuine involvement for councils in the process, or realistic time frames. And, critically, most do not believe that it will solve the financial problems that councils face.”
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In contrast, Tim Oliver, Chairman of the County Councils Network, defended the reorganisation as a “once-in-a-generation opportunity” to improve public services and financial sustainability in two-tier areas.
He argued that most councils now recognise that the current system is “no longer viable”, with the complexity of multi-tier governance creating confusion among the public.
Councillor Oliver added:
“To create councils that can rise to the challenges of the 21st century, deliver better local services, and generate significant savings, they must be at the right size and scale. This means establishing unitary councils serving populations of at least 500,000, and the Government should maintain this figure as a minimum.”
A spokesperson for the Ministry of Housing, Communities and Local Government defended the reforms, describing the current state of local government as “crumbling”.
They said:
“We are prepared to take the tough choices necessary to rebuild local government and give taxpayers the services they deserve. Reorganisation is difficult, but it is the right decision to end the two-tier premium and create a more streamlined and accountable system.”
The spokesperson added that the Government is making £69 billion available for councils across England and is working closely with local authorities to implement its Plan for Change.
Conclusion
While the Government remains committed to its plans for “super councils”, this latest survey reveals deep scepticism among those working within local government. Many senior figures doubt that reorganisation will deliver the promised financial benefits and worry about a lack of consultation and realistic timelines.
With financial pressures mounting and a significant number of councils facing potential bankruptcy, the coming years will prove crucial in determining whether these reforms can successfully deliver the efficiencies and improvements the Government has promised.
