A third of English councils will require government bailouts over the next three years, according to new research

February 2026

A recent study indicates that a third of English councils expect to need additional financial support from the government within the next three years. Furthermore, with increasing demand for services and rising costs exceeding available funding, many councils anticipate difficulties in setting a balanced budget for the upcoming financial year.

 The survey by the Local Government Association (LGA) polled the Chief Financial Officers (CFOs) from 315 English councils between 19 December 2025 and 16 January 2026, receiving 154 responses. The respondents were asked about their ability to set a balanced budget for the 2026/27 financial year, whether their councils would be able to fulfil all their statutory duties in the next three financial years and the likelihood of needing to apply for exceptional financial support (EFS).

Among those surveyed, nearly three-fifths (58%) of all councils admit it will be fairly or very difficult to set a balanced budget in 2026/27, while for social care councils, this figure rises to over two-thirds (69%). And while the majority (84%) of all councils are confident they will have the necessary funds to meet their statutory obligations for the 2026/27 financial year, less than half (43%) are confident they will be able to do so by 2028/29. Once again, confidence is even lower among social care councils, with just a third (33%) reporting they are fairly or very confident of achieving this.

The findings also show that one-sixth (15%) of councils have either applied for or are considering applying for exceptional financial support (EFS), which allows councils to cover day-to-day revenue costs by borrowing or with capital receipts. However, by the financial year 2028/29, one third (34%) anticipate they will need EFS to supplement their budgets.

LGA Chair Louise Gittins says: “Councils are doing everything they can to protect the services people rely on, but demand and costs continue to rise faster than funding, leaving many with no choice but to consider emergency financial support.” She adds that short‑term fixes are no longer sufficient and calls for more sustainable funding and reform.