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The Financial Resilience Index, produced by CIPFA in collaboration with Infoshare+, shows a council’s position on measures associated with financial risk, and compares it with a set of statistically generated ‘nearest neighbours’ based on 20 factors including deprivation, employment and population density.
It stops short of providing each council with an overall risk score or predicting which authorities are at risk of needing to issue a Section 114 notice – the idea is to leave that kind of thing up to Section 151 officers – but it has incidentally provided a risk overview of the sector.
One of the most striking figures in the index was the surge in local government borrowing. External debt across English councils rose by 11% in 2024-25, reaching £106.9bn.
While debt has climbed, the safety net of usable reserves has frayed. As a proportion of net revenue expenditure, reserves dropped by four percentage points, falling from 43.7% to 39.6%. This means that while cash levels might appear stable in absolute terms, they are failing to keep pace with the rising costs of service delivery, leaving councils less able to absorb unexpected shocks.
Those two facts combine to leave the system exposed. The index also underscores how a handful of demand-led services are consuming the vast majority of local budgets, leaving little room for discretionary spending.
Dominance of statutory services
Social care dominated local authority budgets, with county councils allocating an average of 86% of their net revenue expenditure to adult and children’s social care, well above the national average of 78%. Meanwhile, the crisis in SEND deficits reached critical levels.
Accumulated deficits in the Dedicated Schools Grant reached 20 times higher than the value of councils' unallocated reserves. Most of this liability will now be written off by the government, but upcoming reforms will need to set the system up for a sustainable future, else the deficit crisis will occur again.
CIPFA and Infoshare+ said the research “highlights what the data points to for urgent, targeted action by local and central government”.
CIPFA senior policy manager Joanne Pitt added: “The 2025 Financial Resilience Index shows a sector under sustained pressure. Demand-led costs in social care and SEND, combined with acute challenges like homelessness, are pushing councils closer to the edge. While the government’s move towards more transparent, needs-based, multi-year funding is welcome, there is still a long way to go.”
To view your authority data, simply search for and select the authority on the CIPFA website.
