Laura Sharman 09 September 2019

Local government faces £25bn funding shortfall by 2025

Local government faces £25bn funding shortfall by 2025 image

Local councils will face a £25bn funding gap by 2025 as funding reforms will shrink government grants to almost zero, a new report has argued.

The report, published by the TUC and New Economics Foundation (NEF), warns ringfenced grants will account for less than 9% of local authority expenditure by 2025.

Although councils will be able to retain a higher proportion of business rates, this will leave them more exposed to the economic harm expected from a no-deal Brexit, it argues.

It also found that poorer areas are at greater risk of funding shortfalls as they face a bigger challenge in increasing business rate growth.

TUC general secretary, Frances O’Grady, said: ‘This government’s changes to how councils are funded leaves a colossal hole in local budgets. And it’s the poorest communities that will face the biggest shortfalls.

‘We need a local government funding system that helps rebuild local services and closes the funding gap between poorer and richer areas.’

Fair funding delay image

Fair funding delay

The delay to the fair funding review can only add to anxiety over the future of local government, says Mark Whitehead
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