As councils face mounting financial pressure, Joanne Pitt, CIPFA Senior Policy Manager, argues the Autumn Budget must pair funding decisions with long-term reform to secure local government’s future.

As the Chancellor prepares to deliver the Autumn Budget, the financial health of UK local government is coming under intense scrutiny. Across the country, councils are discussing their budgets and council tax levels, and for many, the outlook is bleak.

With the Budget landing only a few weeks before Christmas, few in the sector expect the red box to contain much festive cheer.

Adult and children’s social care, SEND and temporary accommodation continue to consume most council budgets, preventing investment in discretionary services. Preliminary findings from CIPFA’s annual Resilience Index, to be released in January 2026, reinforce this concern.

In the run up to any budget, calls for more funding are predictable. Yet what now dominates the local government finance debate is Fair Funding 2.0 – a reform that seems more about redistribution than new resources. There is also a palpable nervousness among chief finance officers, as no one is certain what their share will be. Calculations vary and questions remain about potential changes to the formula.

Once the dust settles on both the budget and Fair Funding, some in government may expect local authorities to show greater financial stability – especially those who interpret ‘fair’ as ‘enough’. This assumption must be challenged. Financial stability will only be achieved if public sector policy reform forms part of that equation.

Reform takes time – and courage

While the Budget is an important moment in the political and fiscal calendar, the kind of deep, lasting reform local government needs cannot be delivered in a single day. Effective reform takes time – often years – and requires patience, collaboration and political will. As the saying goes: ‘A society grows great when old men plant trees in whose shade they shall never sit.’

It is also vital that central government recognises that such reform demands continuity. Constant shifts in policy direction and short-term pilots create uncertainty and make it harder for councils to invest confidently in long-term solutions. A stable policy environment is a key enabler of reform.

A long-term shift to prevention

Reform must include a long-term shift to prevention. Prevention is a cornerstone of financial sustainability, and understanding current investment allows us to identify how far resources must move upstream to reduce demand. CIPFA’s ongoing work with The Health Foundation on understanding investment in prevention is a small but crucial step in this direction.

Managing demand for high-cost statutory services is essential if we are to stem the rise in councils requiring exceptional financial support from central government – a figure that has reached 42 since 2020. However, meaningful change takes time to deliver. The Budget must recognise that there is a lead-in period before the benefits of reform can be realised. Any credible plan must therefore balance long-term ambition with short-term stability and support.

Reform already underway

Local government is no stranger to reform. Councils undergoing structural reorganisation know just how complex and time-consuming transformation can be. CIPFA's advisory work has given us a clear understanding of the challenges councils face during major structural change and that, while savings do emerge over time, they take longer to secure than many expect. While councils should be ambitious, they need to be realistic as well and staying focused and 'gritty' when developing their forecasts and implementation plans.

Other examples of reform include the Casey Commission, chaired by Baroness Louise Casey, which has until 2028 to deliver proposals for reforming adult social care. Meanwhile, the long-awaited schools white paper – expected to outline reforms to the special educational needs and disabilities (SEND) system – has been delayed until 2026. And, of course, funding reform remains unresolved.

It’s unlikely that the Chancellor will address SEND directly on Budget Day. The current accounting treatment of SEND deficits is hard to justify, yet tackling it will require some political bravery, decisive action and a carefully managed transition between the current and future systems. Some reports even suggest the Budget could introduce reforms to the council tax system. While few would make the case that council tax is perfect, launching another major reform now would stretch the sector’s already limited capacity to breaking point.

A call for a fairer, more resilient sector

The Chancellor must seize this moment to commit to a fairer and more resilient funding architecture, underpinned by meaningful reform. Anything less risks undermining the very foundations of public service delivery. Only by pairing reform with a sustainable funding framework can local government fulfil its potential as a true driver of social and economic growth.

Local government stands ready to play its part – but it cannot do so without the tools, resources and policy stability it needs. The Budget offers an opportunity to reset the relationship between central and local government, grounding it in partnership rather than crisis response. It is an opportunity that must not be missed.

Discover all the latest analysis in our Autumn Budget Insights series.