The Local Government Association (LGA) has warned that councils across England are facing a £7 billion funding black hole by 2028/29, with North East authorities facing a combined shortfall of more than £200 million over the next three years. The LGA warns that without significant reform, essential services such as adult social care, children’s services, homelessness support, and school transport for children with special educational needs and disabilities (SEND) face severe cuts.
North East councils face combined shortfall of £200m
Seven local authorities in Tyne and Wear, Northumberland, and County Durham are facing a total funding gap of over £200 million by 2029. Newcastle City Council has a projected gap of £37 million, while Gateshead faces £33.7 million, Sunderland £23.6 million, South Tyneside £35 million, North Tyneside £9.5 million, and County Durham £31.7 million. Northumberland County Council needs to make £18 million in savings this year and a further £34.6 million by 2029.
The LGA’s analysis shows that the national funding gap is so large that it exceeds the current combined English council spending on roads, transport, homelessness, and housing services. By 2028/29, it would cost councils 22% more than current spending levels just to maintain services at their existing standards.
Councils call for reform and fair funding
Colin Ferguson, Liberal Democrat leader of Newcastle City Council, accused successive governments of neglecting local councils. He said: "Fair funding for local government, including well-run councils like Newcastle, needs to be higher on the agenda for the new Prime Minister. Sticking plaster bailouts, as we have seen elsewhere in the country, are no way to support vital local services." He added that while devolution is welcome, local councils must have a seat at the table.
Northumberland County Council’s cabinet member for finance, Tory councillor Nick Oliver, said: "Northumberland's settlement over three years didn't even come close to covering inflation, never mind rapidly increasing demand for adults and children's social care. The new Prime Minister needs to face up to these big issues and give councils the freedom and financing they need to deliver locally."
LGA demands end to short-term fixes
LGA chair, Labour councillor Louise Gittins, warned: "Without action, the services people rely on every day, from social care to safe streets, will be eroded. Whoever takes up the keys to Number 10 will have a lot of competing priorities. But fully funded, sustainable public services will need to be at the heart of any plans to improve lives and inspire hope in the future."
The LGA is calling for a new deal from the next Prime Minister that is not reliant on council tax rises, short-term fixes, or emergency bailouts. It also reiterates calls for long-term reforms to council tax, business rates, and SEND and social care funding.
Local councils struggle with rising costs
Stephen Ballantyne, interim director of resources at Labour-run North Tyneside Council, said savings targets of £25 million this year will be "challenging". He added: "Like councils across the country, we are dealing with rising demand for services and increasing costs. Our focus is on responsible financial management, delivering efficiencies, and protecting essential services for residents."
Sunderland City Council, now run by Reform UK, confirmed it supports the LGA’s comments and said work is underway to identify options to close its budget gap. The Ministry of Housing, Communities and Local Government was contacted for a response.
