One in four councils in England could apply for an emergency government bailout to stave off bankruptcy in the next two financial years, councillors have warned.

An unprecedented 18 councils were given Exceptional Financial Support (EFS) from the Government in February to help meet their legal duty to balance their books this year.

The Local Government Association (LGA) said a quarter of councils are likely to apply for EFS in 2025/26 or 2026/27 without additional government funding to plug a hole of more than £2 billion.

Councillor Louise Gittins, LGA Chair, said: “Councils are the backbone of communities. Every day they strive to protect vulnerable children and families, support our older or disabled loved ones to live independent lives, keep our streets clean and pothole-free and build affordable homes but this is becoming increasingly difficult.

“The unprecedented emergency support given to councils this year reveals the extraordinary funding emergency facing local government. As our survey shows, many more councils are being pushed into a precarious financial position.”

Councils continue to face inflation and wage pressures alongside rising demand for services, the LGA said.

Nottingham, Birmingham and Woking councils all went bust in 2023.

They followed Thurrock and Croydon – for the third time – in 2022.

Councils technically cannot go bankrupt but they can issue a section 114 notice, where they cannot commit to any new spending, and must create a new budget within 21 days that falls in their spending envelope.

Ms Gittins said: “This is not just about numbers on a spreadsheet. Budget cuts needed to plug growing funding gaps will affect the most vulnerable members of society and the services our communities rely on every day.

“The Autumn Budget must provide councils with the financial stability they need to protect the services our communities rely on every day.”

Meanwhile 4,908 council-owned non-residential properties have been left empty for part or all of a two-year period between January 2022 and December 2023.

This has cost taxpayers tens of millions of pounds in insurance, security, maintenance and renovation, research by the TaxPayers’ Alliance (TPA) found.

Shimeon Lee, researcher at the TPA, said: “Taxpayers will be amazed by the property portfolio that has been built up by big-spending town hall bosses

“But what will really shock residents is the number of local authorities who have allowed prime real estate to sit vacant, despite complaining incessantly about the perilous state of their finances.
“Councils across the UK need to carefully review their assets and ensure they develop a strategy for any that are being under-utilised.”

Of 172 councils that provided data for both 2016-17 and 2022-23, the number of empty properties has increased by 11.2% from 3,206 to 3,564

The council with the largest number of empty properties was Sandwell in Oldbury.

While the region with the most unoccupied properties was Scotland with 1,044.

23 councils reported zero empty properties.