Exceptional Financial Support deals risk becoming "normalised", LGA says

New analysis commissioned by the LGA ahead of the November 2025 Autumn Budget also revealed that councils across England are at risk of substantial budget overspends in 2025/26 across adult social care, children's social care and homelessness services.

Citing the analysis in its Autumn Budget submission, the LGA called for the Government to increase council resources, ensure the Fair Funding 2.0 reforms are implemented properly, and address the £5bn SEND deficit hanging over the sector.

Its submission welcomed planned public service reform, but added that the sector cannot deliver growth, reform public services or improve life chances without fixing local government finances.

It pointed to figures showing that between 2022/23 and 2024/25, despite increased levels of budgeted spend, councils overspent annually on average by 5.2% on adult social care, 14.2% on children's social care, 25.1% on home-to-school transport for children with SEND, and 51.9% on homelessness.

It also said that despite the continued growth in budgeted spend, data for councils' Q1 spending across these three services indicates that 2025/26 budgets are already under pressure.

As a result, councils are increasingly reliant on emergency measures such as in-year cuts to spend on other services and drawing on depleting reserves to balance their books, it said.

It said that councils are also being pushed to take Exceptional Financial Support (EFS), with 29 councils (including nearly one in six of all councils with social care duties) requiring EFS agreements this year to borrow, sell assets or increase council tax above national limits to keep essential services running.

This is a substantial increase on the number last year, the submission said.

Current EFS arrangements, which allow capitalisation of revenue costs, should be reviewed to ascertain whether they are achieving the objective of supporting councils in returning to financial sustainability, the LGA added.

It called for the Chancellor to: 

• Provide councils with a significant boost in resources to prevent widespread financial failure and empower councils to unleash growth and service reform at scale.
• Ensure the Government's Fair Funding 2.0 reforms do not put the sustainability of individual councils' finances and services further at risk by ensuring that robust transitional arrangements are put in place to protect councils from both cash-terms and real-terms cuts where necessary.
• Address the £5 billion SEND deficit, which continues to hang over local budgets.

Cllr Louise Gittins, LGA Chair, said:  "Council costs and demand for services are soaring – especially in children's and adult social care, homelessness, and SEND home to school transport – leaving significant potential overspends this year.

"The consequences are visible everywhere. Fewer neighbourhood services, reduced investment in prevention, and growing pressure on those who rely most on local support. 

"When a system relies on emergency bailouts to function, it is fundamentally broken."

Adam Carey