A whitepaper has been published by the Local Government Association (LGA) setting out how a new relationship between central and local government – which provides long-term financial certainty and empowers councils – is the only way for whoever forms the next government to solve the issues facing the country.

Produced ahead of the General Election, the ‘Local Government White Paper’ includes new analysis, which reveals that councils in England now face a funding gap of £6.2 billion over the next two years. This is being driven by rising cost and demand pressures to provide adult social care among other services.

These pressures are increasingly leaving councils with less funding to provide universal local services that people rely on every day, the association stresses. A recent LGA survey found two thirds of councils have already had to make cutbacks to local neighbourhood services this year (2024/25) – including waste collections, road repairs, library, and leisure services – as they struggle to plug funding gaps.

The LGA is calling on all political parties to commit to a significant and sustained increase in funding for councils in the next Spending Review, alongside multi-year funding settlements and plans to reform the local government finance system. This year saw the sixth one-year settlement in a row for councils.

Without this, the LGA is warning that cost and demand pressures will continue to stretch council budgets to the limit in the coming years, leaving more councils of all political colours and types unable to deliver their legal duties for their residents and putting vital services at further risk of cutbacks.

However, the LGA said it is not just about local government having enough money to provide services for their communities.

The whitepaper calls on the next government to urgently commission a major review of public service reform to understand how all public services can work together within their local communities, focusing on a joint approach to investing in more preventative services for people in need and reducing demands on current costly and high need services such as adult and children’s social care.

Focusing on how councils, when given the powers, can shape their local areas, the paper also makes clear that economic growth can only be achieved if every local economy is firing on all cylinders.

To unlock the potential of people and their communities, the LGA has set out how councils can play a vital leading role in unlocking labour markets, creating jobs, plugging skills gaps, and increasing productivity. This includes devolving powers to run local skills and employment schemes, ending fragmented, short-term growth funding pots, and backing local climate action.

Cllr Kevin Bentley, Senior Vice Chairman of the LGA, said: “We all rely on local government to keep our streets clean, collect our bins, fix our potholes, build more homes, create jobs, keep children safe and support people of all ages to live fulfilling lives.

“However, a funding gap of more than £6 billion facing local services over the next two years – fuelled by rising cost and demand pressures – means a chasm will continue to grow between what people and their communities need and want from their councils and what councils can deliver.

“On July 5, whoever forms the next government will be faced with many challenges, whether it is building more affordable housing, improving care for adults and children, reducing homelessness, boosting inclusive growth or tackling climate change.

“Local government’s offer to the next government is huge. Respect us, trust us and fund us. By working together as equal partners, we can meet the fundamental long-term challenges facing our communities.”

A previous report from the LGA suggested that powers to ban pavement parking need to be extended to all areas across England to save lives and make streets safer for those with accessibility requirements.