For non-UK readers: UK councils have limited revenue-raising powers compared to local government in other countries, and rely on 3 sources of income:
Central government grants
Council tax (on residential properties)
Business rates (on commercial properties)
This amounts to c. 7% of the total UK tax base, versus c. 32% collected locally in Germany or 50% collected locally in Canada.
Central government grants were cut by 40% in real terms between 09/10 and 19/20 from £46.5bn to £28.0bn.
Council tax has gone up 30% over the same period, but it can’t go up more than 2% annually without passing a referendum (unlikely). Some councils in dire straits have recently been allowed to raise it 5%.
Local authorities have been underfunded for over a decade. Other UK councils which have already declared bankruptcy, either through running out of money, or through losing vast amounts of money in risky schemes attempting to replace missing central funding: