Labour is hanging debt-stricken councils out to dry ...Middle East

These English councils may be the most indebted, but they are only the tip of the iceberg of the local government debt crisis.

To its credit, Labour has increased council funding by 6.8 per cent for 2025-26, but this is not sufficient to absolve councils of the struggle with past debts and contemporary demands. Moreover the EFS actually has the capability to make things worse for councils – and those of us who live in their boundaries.

What are obscurely described by Government ministers as “capitalisation directions” under the EFS process are in fact loans made on the condition that councils must sell assets and/or cut services to the public to repay the loans.

Croydon is currently around £1.4bn in debt, has closed four libraries this year and is proposing to cut youth services and close a carers’ centre.

Selling off resources now will reduce service capacity in the future. With the Government keen to expand childcare provision, it should not be sitting idly by.

Raising council tax won't solve our problems – just look at Croydon

Last year 19 councils were offered EFS, but this year it is 30. Nearly all of the 19 are back in this year’s list of 30 – many, like Croydon, taking more “support” than they did the year before.

For local residents it’s heads you lose, tails you lose. As The i Paper has reported, nearly every council in England is increasing council tax by the maximum allowable 5 per cent this April (above inflation), and several (including Birmingham) have been allowed to make increases of above 5 per cent, up to 10 per cent.

For residents, you pay more to get less – and that’s not a good deal. In many areas of the country, it doesn’t matter who you vote for in local elections, you will get higher taxes and worse services.

In the absence of that write off, councillors need to make a collective stand: stop cutting services, stop selling assets, and refuse to govern. Then the Government would have to confront the crisis itself.

Andrew Fisher is a former executive director of policy for the Labour Party

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