Town from above

Are councils in crisis?

Published on 14 February 2024

Why are local councils facing funding pressures? What can government do to help them?

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Over recent months, you may have seen local authorities warning that they are facing a funding crisis. Since 2021, six local authorities have declared themselves effectively bankrupt, and many other local authorities have reported that they may soon be forced to do the same.

How did we end up here? Why are local councils facing funding pressures? And what can government do to help them?

Joining us to answer these questions are Tony Travers, a professor in the Department of Government at LSE and expert on local government, and David Phillips, Head of Devolved and Local Government Finance at IFS. 

Zooming In: discussion questions

Every week, we share a set of questions designed for A Level economics students to discuss, written by teacher Will Haines.

1. Between 2010-2015, why did local councils have to cut spending despite there being no cut to council tax?

2. One of the guests mentions that local councils have monopsony power over adult social care providers, whilst children's social care providers have monopoly power over local councils. Define these two terms and explain the possible impact on prices.

3. How would you structure council tax so that it is fair and generates sufficient revenue for local councils to fund their expenditure?