Councils call for access to £2.5bn low-interest loans meant for housing associations

To help councils build more homes, the LGA has also repeated its call for rent convergence to be set at a “minimum” of £2 per week. The government is currently consulting on a proposed change. 

In its submission, the group also called for the preferential borrowing rates for social housing for the Public Works Loan Board to be made permanent.

The group also wants the government to continue to invest in the One Public Estate programme, the Brownfield Land Release Fund and the Local Authority Housing Fund. It also wants to see a commitment to multi-year funding for the Council Housebuilding Support Service.

The LGA has also called for the government’s New Burdens doctrine to be changed so that all new burdens placed on councils’ Housing Revenue Accounts – including plans for a new Decent Homes Standard and minimum energy efficiency standards – are “fully assessed and funded”.

Elsewhere in its submission, the LGA warned of “substantial” overspends on homelessness services amid “unrelenting” demand.

The LGA said many are being forced to rely on “emergency measures” such as in-year cuts to discretionary services and drawing on their diminishing reserves to balance their books. 

“This is not financially sustainable,” the group said.

Between 2022-23 and 2024-25, councils overspent annually on average by 51.9% on homelessness, the LGA reported.

In the current financial year, planned budgets for homelessness rose by 38.8%, according to the LGA. However, the group warned that “budgets are already under pressure and that there is a clear potential for overspends in line with the previous three years in these services”.

The LGA flagged that 29 councils required exceptional financial support in the current financial year, up from 18 in 2024-25, with the risk that government bailouts are becoming “normalised”.

The LGA said it wants Ms Reeves to provide councils with a “significant boost in resources to prevent widespread financial failure”.

Louise Gittins, chair of the LGA, said: “Council costs and demand for services are soaring – especially in children’s and adult social care, homelessness and SEND home-to-school transport – leaving significant potential overspends this year.

“The consequences are visible everywhere. Fewer neighbourhood services, reduced investment in prevention, and growing pressure on those who rely most on local support.

“When a system relies on emergency bailouts to function, it is fundamentally broken.”

An MHCLG spokesperson said: “We’re turning the tide on decades of underfunding in councils in England so we can give people the high-quality public services they deserve.

“We’ve made £69bn available this year for councils – a 6.8% increase in cash terms – and will go further by fixing an outdated funding system so that money goes to places that need it most, and introducing multi-year finance settlements to give councils stability.”