LGA webinar: Navigating financial uncertainty, 25 November 2025

LGA introduction

Ami Beeton, Senior Advisor for Finance Improvement at the LGA, set out some opening context around the financial uncertainty facing local authorities, including acknowledgment of the Government’s response to the Fair Funding Review 2.0 consultation which sets out proposals for new formulae which will form the basis of the local government finance settlement from 2026/27 onwards. More detail on the LGA’s response to the Fair Funding consultation can be found here. 

Ami also referenced the LGA survey of Chief Financial Officers earlier in 2025, where 25 per cent reported that their council had either already applied for EFS or expected to do so during 2025/26 or 2026/27. This is seen to be indicative of the growing financial emergency facing councils. The LGAs response to the 2025 Spending Review, set out the LGA’s view on EFS that “there is still a risk that EFS as currently designed could potentially load struggling councils with further debt and/or undermine future capital programmes by burning through councils’ capital receipts. In this context the Government should assure itself that the current Exceptional Financial Support programme is achieving its objective of supporting councils in returning to financial sustainability in an efficient and effective manner.” 

Presentation 1 by Barry Scarr, Finance Improvement and Sustainability Associate, Local Government Association

Barry Scar emphasised that with 30 councils approved for EFS in 2025-26, the term ‘exceptional’ was no longer meaningful.

Barry began by explaining that EFS is a capitalisation direction either funded from capital receipts from sale of assets or borrowing. Since its introduction a positive impact of EFS has been that it has created an opportunity for councils to engage with Government about their financial situation, before they are forced to issue a S114 statement.

However, EFS should not be viewed as additional revenue grant funding, Barry emphasised. He noted that EFS may result in:

• a reduced remit for councillors, as they are often required to work within the framework of a statutory or non-statutory improvement board
• an assurance review or a Best Value Report being issued
• ongoing monitoring, feedback and engagement with MHCLG
• the potential for political and management turnover
• the potential of reputational damage for the council.

Barry set out some principles of good financial planning building upon an LGA publication released in 2024, to help councils navigate financial uncertainty and build resilience. This included: 

1. Strategic financial planning, balancing ambition with realistic budgeting and avoiding optimism bias about expected savings. Horizon scanning, scenario planning, and financial forecasting are key tools to help achieve this.
2. Empowering finance functions by enhancing the skills and capabilities of the finance teams; enabling a data-driven and finance-driven approach. Ensure that data systems are up to date and interface with other systems. Conduct data quality and data assurance audits.
3. Strengthening financial stability by maintaining strong balance sheets. Assess the impact on the balance sheet when making commercial investments and consider capital spend.
4. Developing economic stability and sustainable local growth by managing demand and markets in areas such as social care and housing. Have a commercial mindset when dealing with suppliers.
5. Strategising risk by identifying and robustly preparing for potential risks with the audit committee.

Presentation 2 by Kathy Freeman, Strategic Director of Resources, London Borough of Havering

Kathy began by setting out the context for the London Borough of Havering, which first received EFS in 2024-25 to help deal with the increasing demographic demands in the borough, including a large proportion of older age adults and the fourth fastest growing children's population nationally since the 2011 census. Havering benchmarks as a low-cost council with some of the lowest unit costs across London but has one of the smallest spending powers in London.

In response to this situation, Kathy implemented the following actions to manage the council’s financial position, starting with the basics:

• Implemented spend and recruitment controls, and reviewed purchase cards, whilst balancing the need to empower services and the workforce.
• Conducted a weekly review of the council’s cash flow to check for liquidity.
• Regularly reviewed the performance monitoring report, seeking to improve how they retained staff as well as reducing the number of sick days taken and the amount of agency staff employed.
• Built a strong relationship with the senior leadership team and cabinet, as well as the rest of the workforce, so as to engage them about the severity of the situation but maintain morale. Conducted ‘Let’s Talk’ sessions and put out regular internal comms with the workforce.
• Continually considered financial best value principles by asking the question, ‘Does this deliver value for money’?
• Engaged with the market and considered which suppliers offered the best value for money versus outcome.

Havering has taken the opportunity to re-design some areas of service, including a fully integrated commissioning team with health partners and converting former offices into self-contained apartments to reduce temporary accommodation pressures.

Kathy emphasised the practical implications of receiving EFS including the fact that deficit is cumulative and grows year on year, which can leave the council in a structural debt position. Kathy’s key lessons learned were:

1. Look at prevention and early intervention to reduce future to support needs.
2. Organisational engagement is key. Speak with a united voice and be honest about the challenges ahead.
3. Accept and manage public and media interest in the council’s financial position.

Presentation 3 by Councillor Ethan Radford, Executive Member for Finance and Resources, Nottingham City Council 

Cllr Radford offered a member perspective on navigating financial uncertainty. He began by providing the context that two thirds of the Nottingham City Council budget is spent on children’s social care, adult social care, and homelessness, which puts pressure on other services. In 2023, Nottingham issued a S114 notice following well-documented financial challenges in the council and has worked with commissioners since 2024.

To stabilise the position and restore financial control, the council undertook several actions:

• Stabilised governance by overhauling decision-making processes and clarified accountability between members and officers.
• Clarified the council plan into three core missions focused on renewal, delivery, and leadership.
• Engaged members by introducing a 12-week engagement process to explain the issues faced in different directorates and services.
• Organised “Star Chamber” sessions to look for potential savings across the board, including in commissioning and procurement, considering whether each contract was still serving needs and best value.
• Looked for diversified funding options by reviewing grants, reserves, ring-fenced pots, and commissioning budgets for efficiencies.
• Rebuilt internal capacity by strengthening corporate core functions like HR, governance, comms, and performance monitoring.

As a result of these actions, Nottingham City Council was able to improve their financial position. They are now forecasting £1 million underspend for 2026–27, have delivered £11.5 million efficiencies, reinvested £15 million in frontline services, and cut debt by one-third. They have not used the full amount of EFS that they originally applied for.

EFS came with significant implications. Councillor Radford reflected that EFS can:

• disrupt capital programmes and debt management
• create shock internally and externally and lead to reputational damage; affecting morale and trust with stakeholders.

Cllr Radford emphasised that EFS should be used as a last resort and that alternatives, such as internal resources and reserves, should be considered first.

The experience highlighted several critical insights for navigating financial uncertainty:

• Engage early and often: Transparent communication with members reduces stress and surprises.
• Challenge assumptions: Test savings proposals for realism and deliverability; avoid optimism bias.
• Culture matters: Instil calm, avoid panic, and maintain positive communications with workforce and residents.
• Don’t strip the back office too far: Strong internal functions are essential for frontline delivery.
• Ask for help: Avoid insularity; learn from other councils and leverage sector expertise.
• Ensure a strong leadership presence: Project confidence, avoid catastrophising, and support teams under pressure.
• Plan for sustainability: Commissioners expect evidence of long-term stability, not just short-term fixes.

Question and answer highlights