The Local Government Association's Spring Statement submission found that 22% of councils responsible for adult social care, children's services and statutory housing are balancing 2026/27 budgets only via Exceptional Financial Support (EFS), the Treasury's emergency facility for authorities that cannot otherwise pass a balanced budget1. The LGA's verdict was direct: EFS arrangements 'are no longer exceptional, but are becoming an ever more relied upon mechanism'. The Treasury exemption now covers 22% of upper-tier councils.
One in five social-care councils balances on a Treasury exemption. Thurrock remains under MHCLG (Ministry of Housing, Communities and Local Government) commissioners with a £1.5 billion Section 114 estate. Birmingham and Nottingham have been issued Section 114 notices in the past two years. The mechanism is the same in each case: councils that cannot fund statutory duties from local revenue apply for Treasury permission to capitalise revenue spending against future asset sales, deferring the rule that bars them setting an unbalanced budget.
The structural point sits beneath every other event in this briefing. Voters tomorrow elect councillors for 5,000+ English seats to manage authorities whose finances only work because central government has waived the rules. Reform's projected county-level expansion takes it into chambers in which the binding constraint on policy is not local manifesto promise but Treasury sign-off on the next EFS application. The Greens' first London council majorities arrive on the same architecture. The financial substrate beneath the elected seats is the part of the contest the campaign did not litigate.
The LGA describes the trajectory in a single sentence: an emergency mechanism that is no longer emergency. The councillors elected on Thursday will manage that fragility for four years.
