Last week's local election results proved disastrous for the big two parties, and a triumph for populist upstarts on the right and left as the fracturing of politics in the UK accelerated markedly. But do local elections actually matter? Sadly, not much, argues Dan Taylor in The New Statesman.
Whatever stripe of councillor you elect in the local election will “act in the same sad way as their predecessors”, under the same miserable fiscal constraints that make “local government an impotent arm of the centralised British state”.
A century ago, local councils built houses, ran trams and buses, owned utilities, employed thousands and raised most of their own revenue. Herbert Morrison's London County Council, for example, ran more than 70 hospitals and built housing on a scale unimaginable today. Now, local councils “administer social care and collect bins. Local democracy has been replaced with skint service delivery” – and it shames the nation.
Start your trial of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Do local elections change much?
Local councils have very limited control over how they raise money, but their list of statutory duties is significant. Councils' core responsibilities include adult social care, children's services including (non-academy) schools, SEND (special educational needs and disabilities) support, local road maintenance, waste collection, housing and homelessness prevention, planning, environmental health, public health, libraries and parks.
Much of this spending is non-optional and not affected by voters' preferences at local elections. A council can choose to scale back flowerbeds and festivals; it can't decide to stop protecting children at risk or refuse to provide emergency accommodation for homeless families.
Are local councils struggling?
Indeed. Councils have spent much of the past few years lurching from financial crisis to financial crisis; more authorities are issuing so-called “bankruptcy” notices; libraries and leisure centres are closing. Everyone is familiar with the impact of the austerity years of the then-coalition and subsequent Conservative governments.
Overall, there was a 21% real-terms cut in funding between 2010 and 2019, putting massive strain on services. What's less well known is that in recent years, there have been decent real-term increases in overall funding, albeit with an increasing range of regional variation. Money for councils grew by around 12% in real terms between 2019-2020 and 2024-2025, and a further 8% since then, taking the overall pie almost back to 2010 in real terms.
Why are local council finances tight?
England's population has jumped by 11% since then and costs have surged in the areas for which councils have responsibility. According to the Institute for Fiscal Studies (IFS), funding per person is about 15% lower in real terms this year than in 2010-2011.
Meanwhile, big increases in the minimum wage have ramped up spending on social care. Other key areas where spending has shot up include temporary accommodation for vulnerable households, specialist and secure children's homes, and a surging bill for specialist home-to-school transport for SEND pupils.
Where do local councils get their money from?
Financing has changed dramatically in recent years. Council tax used to account for about a third of funding (36% in 2010), but now it accounts for the majority (about 56%). That's because central grants from Whitehall have been cut sharply since 2010 – by 55% in real terms up to 2019-2020. As a result, council tax has been rising quickly – the average band D home's annual bill has jumped 16% to nearly £2,400 in three years, an increase of about £330. This year's rise averaged £111, or 4.9%.
The rest is made up of retained business rates, and income from things such as parking fines, as well as central funding. Last year, central government made £69.4 billion of core spending available to English authorities, £4.4 billion more than the year before.
What do councils spend money on?
On average, councils spend about a third of the total budgets on (non-academy) schools and almost another third on social care. The next biggest chunks were the police, and fire and rescue services, followed by road maintenance and transport. Refuse collection accounts for only about 3% to 5% of spending.
However, these headline figures “mask the extent to which social care is squeezing some authorities' finances, because most district councils are not responsible for these services”, says Andrew Ellison in The Times. Local authorities that have responsibility for social care – county councils and unitary authorities such as metropolitan boroughs – typically spend two-thirds of their budgets on them, according to the County Council Network.
Increasingly, says Ellison, councils appear “less like all-purpose civic institutions and more like emergency care administrators with bins attached” – and without the necessary funding.
What are the pressure points?
According to a recent Local Government Association (LGA) survey of senior council leaders, the biggest budgetary worry is Send support, together with social care, home-to-school transport and homelessness. The government has extended temporary accounting rules – letting councils keep spiralling SEND deficits off their balance sheets – until 2028. But that's merely hiding and postponing a fiscal reckoning.
The LGA calculates that eight in ten councils could face insolvency once the sleight of hand is removed. There's a long and ignoble history of local councils turning to financial speculation and optimistic property deals to fill the gaps; many have come a cropper and may continue to do so.
But without radical reform of local government, councillors of all political colours face a thankless and impossible job. “New people may be in charge in many places,” said David Phillips of the IFS. “But they face the same challenges and constraints as the old guard.”
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
