Cash-strapped Midlands councils make joint call for government help

Councils across the Midlands have warned Deputy Prime Minister Angela Rayner that the majority do not expect to meet their budget targets for the next financial year, putting vital services at risk.

These councils are part of the Special Interest Group of Municipal Authorities (Sigoma), which includes 48 councils outside of London.

These councils serve 14 million people across southern ports, the Midlands, and the North.

The Midlands councils involved include:

• Derby

• Leicester

• Nottingham

• Coventry

• Dudley

• Sandwell

• Stoke-on-Trent

• Walsall

• Wolverhampton

In a letter to Rayner ahead of the Labour Party conference, Sir Stephen Houghton, Labour chairman of Sigoma, called for urgent government action to stabilise local finances.

A survey of finance directors revealed that only 3% of councils are confident they can balance their books by 2025-26, a sharp decline from 25% who felt confident about their budgets for 2024-25.

Services such as children and adult social care are at particular risk.

Over 70% of councils believe children's social care services will fall below-required standards, and 65% expressed concerns about maintaining standards in adult social care.

"A fundamental mismatch"

The high cost of private sector placements, increasing demand for special educational needs support, and workforce challenges were cited as key issues.

In his letter, Sir Stephen warned of a "fundamental mismatch" between the resources available to local authorities and their growing responsibilities.

He highlighted the urgent need for council tax equalisation and long-term financial certainty, as many councils, particularly in poorer areas, are increasingly reliant on council tax revenue while central government funding has been reduced.

The uncertainty surrounding the 2025-26 local government financial settlement and spending review has caused over three-quarters of councils to defer projects, with nearly a third reducing activities to cut costs.

Sigoma is calling for a 7% increase in core spending power for 2025-26 and an annual increase aligned with inflation to address the funding gap.

Some councils, such as Birmingham and Nottingham, have already declared effective bankruptcy.

The government has promised multi-year funding settlements and reforms, but local authorities in the Midlands and beyond are calling for more immediate and comprehensive support to avoid further service cuts and financial instability.