Bedford Borough Council’s request for emergency financial support reflects a wider crisis facing local government, with a new report warning that nearly four in ten councils across England expect they may need similar help within the next five years.
Exceptional Financial Support (EFS) allows councils facing severe financial pressures to borrow money to balance their budgets.
Growing reliance on Exceptional Financial Support
It does not provide additional government funding but instead allows authorities to treat some day-to-day spending as capital expenditure and take out loans, which must later be repaid with interest.
Read: Mayor says Bedford Borough Council has “real troubles” as new finance committee begins work
The warning comes in the 2026 State of Local Government Finance report published by the Local Government Information Unit (LGIU).
The survey, based on 189 responses from representatives at 148 councils across England, found 39 per cent of councils say they are likely or very likely to need EFS within the next five years.
Read: Government confirms £80m emergency support for Bedford Borough Council
More than half of councils also said service cuts planned to balance budgets could increase risks to vulnerable residents, while nearly one in five authorities making cuts said they feared they may struggle to fulfil their statutory duties.
40% of councils
Jonathan Carr-West, chief executive of LGIU, said councils remained “far from confident about their financial future”.
He said: “Almost 40% of councils believe that they may need EFS support in the next five years – a short-term and costly sticking plaster that can be likened to a payday loan.”
Regional data shows 29 per cent of councils in the East of England believe they may need EFS within five years, while 87 per cent expect to increase council tax and 58 per cent plan to use reserves to manage financial pressures.
Mr Carr-West said: “Exceptional Financial Support (EFS) doesn’t mean more money for councils; it just means they can take on more debt to balance their budgets.
“And although EFS can help stave off effective bankruptcy for a year, councils usually need to access the scheme for years at a time, which can result in unsustainable debt as outlined in our recent research.
“The government needs to consider the long-term plan for how councils can be supported to leave the EFS scheme, and avoid this becoming a major risk to local and central government finances in the years to come.”
The survey also found councils are increasingly relying on council tax rises, higher fees and charges, spending reductions and the use of reserves to balance their budgets.
The LGIU said reform of the local government finance system was needed to provide councils with more sustainable long-term funding.
By John Guinn
Local Democracy Reporter
