THE “out of control” crisis in local government driven by long-term funding limitations can only be ended by the government providing billions of pounds more to councils, MPs said today.

A report by the levelling-up, housing and communities committee said that additional council funding announced earlier this month was insufficient to address the scale of the problems.

A failure to increase funding would push services including social care and support for children with special educational needs to “breaking point” and could lead to well-run councils going effectively bust, the committee said.

Councils have repeatedly warned that more than a decade of funding pressures are putting vital services under severe strain.

Earlier this month, Communities Secretary Michael Gove increased the local government financial settlement for 2024-25 with measures worth an additional £600 million.

This increased available core funding by 7.5 per cent compared to 2023-24, but the Local Government Association estimates councils are facing a funding gap of £4 billion over the next two years to continue services at current levels.

Committee chairman Clive Betts said: “There is an out-of-control financial crisis in local councils across England.

“Long-term reform is vitally needed. The funding model for local councils is broken.

“Councils being forced to hike up council tax, in a forlorn attempt to plug increasingly large holes in their budgets, is unsustainable and unfair to local people who are, year on year, seeing less services while paying more.”

A total of eight councils have issued a section 114 notice declaring effective bankruptcy in the last six years for the first time in 18 years before that.

A Department for Levelling Up, Housing & Communities spokesperson said it recognised the challenges and that was why it had announced the additional support package.