'Spending Review: Councils demand cash to stave off bankruptcy'
Posted on June 05, 2025
By Luke O'Reilly and Tom Belger
More than a dozen urban councils risk declaring effective bankruptcy and Reform could make further gains unless the Chancellor finds additional cash for local authorities, a leading council chief has warned ahead of the Spending Review.
Stephen Houghton, Labour leader of Barnsley council and chair of SIGOMA, which represents 49 urban authorities in the North, Midlands and south coast, warned that a third of its members could be forced to issue section 114 notices without further support after years of austerity. Section 114 notices signify that a council is unable to balance its budget.
Funding must be ‘rebalanced’ towards poorer towns
Houghton, who has led the South Yorkshire town’s council for almost three decades, warned that cuts to local government in the imminent Spending Review would have dire consequences for councils.
“The consequences will be more Section 114s and the deterioration of public services. Reform will make the most of that, particularly in those more deprived areas.”
He suggested any further squeeze on council funding could mean basic services like road repairs, street cleaning, bin collection and grass-cutting could face further cuts, and such visible changes risk being seized on by Reform.
He called for council funding to be “rebalanced”, with more weighing for deprivation in how funding is allocated between councils, as well as equalisation of council tax levels across the country, and a “reset” of business rates.
Speaking in Westminster shortly after visiting Number 10 to make his case – he said he felt “listened to” at least – he also said the government needed a “cost-of-living plan”, spanning not only reversing winter fuel cuts and expanding free school meals, but free or discounted transport for working people receiving low-income benefits.
Capital spending should also be spent more across the country to boost local services like transport and the quality of housing, and not just in cities, he added. “Towns give the best political return.”
‘There is no story for left-behind places where Reform are making in-roads’
Houghton said Labour needs a narrative to combat the rise of Reform in left behind towns.
“At the moment, there is no story, either nationally or certainly for those left behind places where Reform are making in-roads.
“So we need a new narrative (where) we recognise what those places have been through the last few years, we understand the challenges those communities face, and we are going to try and address those things – a ‘we get it’ narrative.
“There isn’t that there at the minute. And the only narrative people are getting is Farage – that you’ve been left behind, and actually no one’s bothered, and actually migration is the issue – when it’s not.
“But that’s what it’s become. So we have to turn that around.”
A new minister for the left behind?
Houghton called for the creation of a cabinet member responsible for “bringing back” left behind communities, championing them at the cabinet table.
“You need to identify someone, but they would be around the cabinet table, not as a bolt on, but as a serious member of the cabinet, to say: ‘We get it, and we’re doing something about it’.”
Houghton argued established parties had failed to deal with the underlying causes of Reform’s success.
“Reform isn’t a party. There is a Reform Party, but Reform is a movement for change, and people have to take that seriously, and they have to deal with the underlying causes of that movement, of that requirement for change.
“It’s because too many places in the UK have been left behind.”
He suggested Labour had been “warned” by the Brexit vote, Boris Johnson’s success in the Red Wall, the Southport riots and Reform’s locals breakthrough. “How many times do you have to hear it?”
The council leader warned that without addressing the “root causes”, Farage could make serious gains and even be the next Prime Minister. “Without those Red Wall seats, there is no second term. It’s done.”
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