UK Local Governments Risk "Widespread Collapse"

Local governments across England, Scotland, and Wales face a £4.3 billion ($5.6 billion) hole in their finances in the coming year, which could lead to cuts in jobs and vital services such as rubbish collection, Hanna Ziady reported for CNN.

UK’s recently elected Labour government is preparing to unveil plans for local government funding in its first budget next month.

In a report, Unison, the United Kingdom’s largest trade union, warned that without additional emergency funding to cover the projected shortfall in the 2025-2026 financial year, “there is a serious risk of the widespread collapse of local government.”

The funding gap facing local councils is projected to balloon to £8.5 billion ($11.1 billion) the following year, according to the report, which is based on publicly available financial statements and some councils' own estimates of their funding shortfalls provided to Unison.

English councils have lost 9% in "core funding"—a combination of central government funds and local taxes—since 2010, according to the Institute for Fiscal Studies (IFS), amounting to an 18% cut per resident as populations have grown.

The report comes as the UK’s recently elected Labour government prepares to unveil plans for local government funding in its first budget next month, after revealing a £22 billion ($29 billion) “black hole” in the nation’s finances in July.

Unison stated that many local government authorities could be forced to sell land and buildings and cut back on services, such as rubbish collection, libraries, and public toilets, in order to fulfill their legal duty to balance their books.

In a speech last month, UK Prime Minister Keir Starmer warned that the upcoming budget “is going to be painful,” hinting at tax rises. “We’re going to have to make tough decisions,” he said.