Councils in England face a funding gap of £4 billion over the next two years – a £1 billion increase since the LGA’s initial analysis in July.
The new research also shows that by 2024/25, cost and demand pressures will have added £15 billion (almost 29 per cent) to the cost of delivering council services since 2021/22.
Some councils have warned these costs are threatening their financial sustainability, with local government having already absorbed a 27 per cent real-terms cut in core spending power since 2010/11.
Ahead of the Autumn Statement on 22 November, the LGA is clear that using financial reserves to plug funding gaps is not a solution to the long-term financial pressures councils face, and additional resources cannot come solely from hard-pressed council tax-payers.
Cllr Pete Marland, Chair of the LGA’s Economy and Resources Board, said: “Councils remain firmly in the eye of the inflationary storm and council finances are under pressure like never before.
“None are immune to the risk of running into financial difficulty and others have already warned of being unable to meet their legal duty to set a balanced budget and are close to also having to issue Section 114 notices.
“The easy savings have long since gone. Councils are faced with hard decisions about cutting valued services, and increasing council tax and fees and charges during a cost-of-living crisis.
“We call on the Chancellor to act to address the acute financial challenges faced by councils.
“This is vital to protect the local services our communities rely on every day but also to reduce costs falling on other public services and support the delivery of key government agendas on areas such as housing, levelling up and climate change.”