A wave of financial distress is threatening the UK’s devolution drive, with several local authorities now unable to meet their obligations. Recent data shows that eight councils have issued Section 114 bankruptcy notices in the past six years, a stark rise from almost none in the preceding 18 years. A 2024 survey by the Local Government Information Unit revealed that more than half of all councils anticipate a similar fate within the next five years. As the push for greater local power gathers pace—exemplified by Andy Burnham’s devolution plans—the capacity of these strained institutions to shoulder new responsibilities is coming under intense scrutiny.
The Growing Financial Crisis in Local Government
The strain is most visible in Birmingham, where the city council declared bankruptcy in 2023, joining a dwindling list of authorities that have taken the drastic step. The backdrop of serious financial strain is now a common refrain across the country. According to Alan Coppin, a former Crown Representative in the Cabinet Office, “England is already midway through reorganising local government, with 185 councils being reshaped across 21 areas into new unitary authorities, alongside six new mayoral authorities. Disruption is inevitable.” He added that this restructuring is happening “against a backdrop of serious financial strain.” The combination of reorganisation and dwindling funds means many councils are barely solvent, let alone ready to absorb additional devolved duties.
The numbers paint a sobering picture. In the six years up to 2023, eight councils have issued Section 114 notices, a figure that dwarfs the near‑zero tally recorded in the 18 years before. The 2024 survey, which questioned councils across England, found that 51 % believe they are likely to issue such a notice within the next half‑decade. This financial fragility raises a pressing question: can local authorities truly exercise the powers they are being handed, or are they being set up for failure?
Uneven Playing Fields in Devolved Funding
Devolution promises decisions that are closer to communities, but the reality on the ground is far from uniform. One reader, Haile Reed, who works as a bid manager in the third sector, described the experience: “I work as a bid manager in the third sector, applying for publicly procured contracts to deliver employment and support services. From that perspective, the increasing devolution of funding has real potential: decisions can be made closer to communities and, importantly, local organisations should have greater opportunities to deliver services.”
Reed’s observations highlight a stark contradiction. While the aim is to empower local suppliers—including small voluntary and community organisations—these very groups often lack the resources to navigate the complex, fragmented commissioning landscape. “Different local and combined authorities take markedly different approaches. Some have strong procurement practices, engage constructively with providers and appear well equipped to manage devolved funding. Elsewhere, processes can be fragmented, difficult to navigate and considerably less transparent. It is beginning to feel like a postcode lottery,” Reed noted.
Large national organisations can afford to manage multiple procurement portals and varying requirements, but small local charities frequently cannot. The result is a two‑tier system where some areas thrive under devolved funding while others struggle to survive. This uneven terrain threatens to widen existing inequalities rather than close them.
Voices from the Frontlines: Workers, Officials and Community Reporters
The human impact of these systemic challenges is evident in the stories of those working at the coalface. Haile Reed’s concern is not with devolution itself, but with the lack of supporting infrastructure. “But transferring substantial sums of public money must be accompanied by investment in local commissioning expertise, procurement capacity and meaningful scrutiny,” Reed argued. The call is clear: financial transfers must be matched by capacity‑building.
Alan Coppin echoed this sentiment, warning that “layering new devolved responsibilities on to institutions that are simultaneously being dismantled and rebuilt, and in many cases barely solvent, risks devolving responsibility faster than those institutions can actually deliver it. Devolution may well be the right destination, but the sequencing matters.” His analysis underscores the need for a phased approach that first strengthens local capabilities before handing over new powers.
Meanwhile, the decline of local journalism threatens another pillar of community accountability. David Young from St Leonards‑on‑Sea in East Sussex voiced a hopeful proposal: “Lamenting the decline of local media, your editorial proposes ‘a tax on social media giants to fund local journalism’. Yes please. The Hastings Independent Press (HIP), a professional‑quality, bi‑weekly, 24‑page newspaper written by and for the community, has somehow survived 11 years and 310 issues.” The volunteer‑run paper operates without premises, equipment, or grant funding, relying instead on dwindling advertising from small businesses. “Funding from ‘the socials’ would make all the difference to our grassroots collective. To stop living hand to mouth, to plan issues, perhaps even find people to deliver 7,000 copies of the paper to shops instead of doing it ourselves. We can dream,” Young added.
These testimonies illustrate a broader crisis: the erosion of local democratic oversight, both in governance and in news gathering. Without robust local institutions and a vibrant press, the promises of devolution risk becoming hollow.
Funding Local Journalism: A New Hope
The idea of a social‑media tax to sustain community newspapers has gained traction as a potential lifeline. The concept, originally floated in a Guardian editorial on 6 September, aims to redirect a portion of the massive profits generated by digital platforms back into the public sphere. For publications like HIP, such funding could transform a precarious existence into a sustainable model.
A dedicated revenue stream would allow volunteer teams to plan ahead, invest in better production tools, and even professionalise distribution. It could also open doors to new talent, ensuring that local stories continue to be reported with the depth and nuance that national outlets often overlook. The prospect of a tax that supports the fourth estate resonates beyond the immediate need; it speaks to a wider commitment to preserving democratic discourse at the community level.
Why it Matters
The current crossroads in English local government and journalism underscore a fundamental question: can a nation devolve power without first ensuring the institutions that wield it are capable of doing so responsibly? The cascade of Section 114 notices, the uneven terrain of devolved funding, and the plight of community reporters all point to a system stretched beyond its limits. If left unaddressed, these pressures will not only undermine service delivery but also erode the very accountability mechanisms that devolution is meant to strengthen. Investing in local capacity, streamlining procurement, and protecting local media are not peripheral concerns—they are essential to the health of democracy itself. The stakes could not be higher.