CIPFA said that the government must act before time runs out. Credit: Eyesonmilan/Shutterstock.

The Chartered Institute of Public Finance and Accountancy (CIPFA) has issued a warning in response to the Public Accounts Committee (PAC) report on local government financial sustainability.

The report highlights a potential financial crisis facing councils across the UK.

Responding to PAC report, CIPFA Public Financial Management director Iain Murray said: “This report comes at a critical moment and reinforces the growing chasm between the demands placed on local government and the funding available to meet them. Without immediate, urgent and coordinated action, vital services will be placed at even greater risk.

“The PAC rightly highlights that the failure to plan beyond the statutory SEND deficit override, and the impact of new burdens like increased National Insurance Contributions, is creating unsustainable pressure on councils. This lack of joined-up government undermines financial resilience and frontline service delivery.”

CIPFA emphasised the urgency of the situation, stating that immediate government action is necessary.

Murray added: “This isn’t just a fiscal issue – it has real consequences for vulnerable people, particularly children and adults in receipt of social care and children with special educational needs and disabilities. The government’s recent Spending Review announcements on reform need to have a greater sense of urgency in light of this report.

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“We strongly support the PAC’s focus on prevention and outcomes. The current model leaves councils stuck in a cycle of reactive spending, with early intervention services underfunded and overstretched.

“To deliver reform, councils need proper tools, support and coordinated action. The government has a narrow window to act – it must seize this opportunity to restore local government sustainability before systemic failure becomes inevitable.”