Councils across the South East face a funding shortfall of nearly £638m next year, leaving the area’s most vulnerable residents paying the price for years of underfunding, says new UNISON research.
New figures compiled by the union based on information directly from local authorities show council finances remain in a dire state, despite a cash injection following Labour’s general election victory last year.
UNISON’s annual council “funding gap” report estimates the total shortfall between what councils across England, Scotland and Wales need to run services and what they receive will be £4.1bn in 2026/27.
The £638m shortfall across the South East would have been far higher but for intervention from Westminster through the local government finance settlement earlier this year and exceptional support for some local authorities. This was intended to prevent more councils effectively going ‘bankrupt’.
But despite central government’s intervention, regional funding shortfalls remain high – piling further strain on overstretched services, communities and staff.
Evidence from across the South East shows that, after more than a decade of austerity, councils are being forced to take increasingly drastic steps to balance their books.
Some of society’s most vulnerable adults and children face losing vital support, with few places escaping the impact of deep cuts.
Rising inflation and energy costs, plus the growing demand for adult and children’s social care, are pushing fragile council budgets to breaking point, UNISON says.
Homelessness and the need for temporary accommodation are also escalating, with councils warning that the rising cost of providing emergency housing is swallowing up a disproportionate share of local budgets. This leaves fewer resources available for other essential services, from road repairs to youth provision.
Previously, many councils cut discretionary services, sold assets or borrowed more to balance their budgets. Now, senior officials are slashing statutory services they are legally obliged to provide. Examples across the South East include:
- Hampshire County Council faces a budget shortfall of £136,000,000 for 2025/26. Previously, the council discussed making savings by closing local tips, ending homeless support, getting rid of school crossing patrols and supported bus services.
- Surrey County Council, which increased council tax bills by almost 5% back in February, has cut the provision of town centres CCTV monitoring by two-thirds and stopped on-call weekend services for unauthorised encampments.
- Woking Borough Council, which in 2023 was served a 144 Section Notice banning all non-essential spending, has the single largest spending shortfall of any local authority in the country, with a near £170m spending gap going into 2025/26.
Other services routinely subject to cuts include waste recycling, winter road gritting, youth services and libraries.
UNISON believes central government needs to deliver significantly improved, sustained multi-year funding deals for councils to restore financial stability. It should be based on a revised and fairer funding formula to reflect local need, rather than using outdated data.
The union says councils should also curb outsourcing and put the focus on in-house services, scrutinising external contracts with a clear public-interest test.
UNISON South East regional secretary Maggi Ferncombe said: “Councils across the South East are still hundreds of millions short of the money they need to provide essential services. But the slight reduction in next year’s national funding gap shows swift government action can help.
“Local authorities are being forced to make cuts that often hit the most vulnerable hardest, and more needs to be done to protect people across the South East.
“After 15 years of ruthless austerity, no community has been left untouched. Frontline staff are exhausted, services overstretched, and thousands of jobs are under threat.
“Investment in councils, their communities and workers is urgently needed. This includes multi-year funding settlements so local authorities can plan more effectively and deliver services without the constant fear of collapse.”
