Council finance crisis? Here are five solutions to consider.

February 19, 2024
1 min read


  • Bankruptcy in local government is a nationwide crisis.
  • Last year, exclusive polling found that a quarter of English councillors believe their authority will soon go bankrupt.

A nationwide crisis of bankruptcy in local government is looming, with six English local authorities already declaring themselves effectively bankrupt. To address this issue, experts suggest various solutions:

Jessica Studdert of the New Local emphasizes the need for a different approach to allocating resources, highlighting the importance of shifting from reaction to prevention in service provision. She suggests local governments should receive a share of income tax and VAT raised in their area.

Andrew Carter of the Centre for Cities advocates for fiscal devolution to give city-regions more powers and incentives to grow, tying tax revenues to the local economy’s growth. This could lead to reforms in areas like council tax.

Sarah Longlands of the Centre for Local Economic Strategies stresses the importance of responsible spending to support the local economy, suggesting bringing services in-house for cost control and local wealth-building initiatives.

Kate Ogden of the Institute for Fiscal Studies emphasizes the need for a clearer understanding of the services expected from councils and adequate funding to deliver those services. She highlights the regressive nature of relying solely on council tax for funding.

Stephen Houghton of Sigoma suggests recalibrating the funding allocation system to be fairer and more responsive to local needs. He advocates for reforms in the business rates system and the establishment of an independent body to determine allocations.

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