Policy Briefing, March 2025

Local authorities in England are facing significant financial challenges, with a collective deficit projected to reach £9.3 billion by 2026–27. This shortfall is largely attributed to structural issues within the funding system related to the increasing demands and costs of providing statutory services including social care. Of the 317 councils across England, only 14 are expected to balance their budgets or achieve a surplus.

Local authorities in the wider North East region, including the Tees Valley, rank similar to other areas in terms of financial distress, both in absolute and per capita terms, and across local authority types. However, there are growing intra-regional disparities, with the seven local authorities within the newly established North East Combined Authority (NECA) reporting higher deficits compared to other councils in the wider North East region and the national average.

Using data collected from the Medium Term Financial Strategies (MTFS), researchers from Newcastle University’s Centre for Urban and Regional Development Studies (CURDS) and the University of Cambridge’s Bennett Institute for Public Policy map the geography of local authority financial distress in the England and reveal the alarming higher deficits in the North East Combined Authority (NECA) area. Supported by Insights North East, the report, Mapping the gaps: the geography of local authority financial distress in England, highlights the growing intra-regional inequalities across local authorities’ finances that risk undermining essential public services and contributes to the wider debate about how to improve sustainability and resilience.

The full report is available here.

The full policy briefing is available here.