Chancellor Rachel Reeves ’s spending review is “crumbs off the table” and won’t fix the crisis in Labour’s Red Wall heartlands in the North and Midlands .
That’s the view of one councillor in Nottingham, where the city’s finances remain in “critical” condition and Reform UK has taken control of the neighbouring Nottinghamshire County Council .
One youth worker said people in working-class parts of the city, fed-up with cuts, were turning to Reform because they were “looking for any alternative”.
Labour-run town halls are pleading with Reeves and ministers to help them fend off Nigel Farage ’s rise with a funding overhaul that gives deprived areas a bigger share of funding from Whitehall .
Councillors said it was time for Labour to reverse the “levelling down” outside of the south-east which happened under the Conservatives.
It comes as experts warned deprived areas vulnerable to Reform could see more council tax hikes and cuts to services like community centres, bins and pothole repairs.
Crisis-hit Nottingham City Council is one of the eight English local authorities to have effectively declared bankruptcy in recent years.
The Labour-run Midlands council was forced to issue an emergency 114 notice in 2023, with the Government appointing special commissioners to help run the town hall.
Nottingham recently made £18m-worth of cuts to libraries, community centres and charity grants for the year ahead. There are also potentially painful plans to reduce adult social care packages to save up to £3.5m.
Like many cash-strapped Red Wall local authorities, it has also hiked council tax by 4.99 per cent, the maximum level allowed without a referendum.
The council declared earlier this year its financial crisis had at least improved from “terminal to critical”.
However, the Red Wall council still faces a budget gap of £53m for the next four years. And it needed a £25m “exceptional financial support” loan from central Government earlier this year.
Graham Chapman, a Labour councillor in Nottingham, told The i Paper the city council’s finances were “creaking, but not falling apart”.
Chapman – who is also vice-chair of the SIGOMA group of urban councils, mainly in the North and Midlands – said a major “rebalancing” in the local government funding formula was needed so deprived areas like Nottingham get a bigger share.
“The funding formulas for more than a decade have essentially moved funding away from deprived areas,” said Chapman. “The poorer the area, the more funding you lost. I call it levelling down.”
“So we need fairer funding,” he added. “It will help councils in deprived areas at least kept their heads above water. It’s not going to lead to the land of milk and honey.”
Councils’ day-to-day spending will rise in real terms by 1.1 per cent from this year to 2028-29, under funding plans set out by Reeves. It means an extra £3.3bn a year will be going to England’s local authorities by the end of the spending review.
But it won’t make up for the £24.5bn worth of funding cuts during the austerity years under the Conservatives – or meet the rising demands ahead – say experts.
The Local Government Association (LGA) said councils will have to hike bills and make further cuts despite Reeves’s review.
Shuguftah Quddoos, a Green Party councillor in Nottingham, is worried about the “harmful” impact cuts are already having.
Quddoos was suspended by the Labour group after voting against cuts to youth services and grants to community groups in last year’s budget.
“Things have been cut to the bone. When you’re looking to reduce care packages, it’s so detrimental. We know cuts will hurt the poorest the most.
“Rachel Reeves’s spending review seems to be a few crumbs from the table. Labour is not challenging the tide of austerity. It’s austerity 2.0.”
Dr Marcellus Baz, a former boxer who is the CEO of the Switch Up youth charity, said its council funding was cut by 30 per cent last year. He is having “sleepless nights”, he said, about the impact of cuts in the city.
“We are seeing a worrying rise in young people congregating in Nottingham city centre, which is increasingly linked to serious violent crime – including stabbings, antisocial behaviour, and shop theft,” said Baz.
The Nottinghamshire Police and Crime Commissioner’s office said knife crime violence in the area fell 5 per cent in 2024. But there was a spate of knife crime incidents in the city in February and March this year.
Despite Labour’s current domination in Nottingham – holding almost all of its city council seats – the party was warned of the threat posed by Nigel Farage’s party.
Reform UK took control of the nearby Nottinghamshire County Council from the Tories during the election in May.
“We need politicians to sort out the investment in places like Nottingham,” said Baz. “More and more people in the working-class communities I work in are saying they’ll vote Reform – not because they necessarily support them, but because they’re looking for any alternative.”
Nottingham City Council’s deputy leader Ethan Radford, said “significantly reduced” funding during the Tory austerity years saw the authority lose over £100m a year.
But the Labour politician declared the council was “getting its house in order” and said the extra money in Reeves’s review would “go a long way to redressing 15 years of underfunding”.
Aside from the spending review, Labour has promised to look at the formula which determines each council’s share of funding. Proposals will be set out later this summer.
Red Wall council bosses are pushing ministers to be bold as possible.
Labour leader of Barnsley Council Stephen Houghton, who is also chair of SIGOMA, which represents 49 urban authorities mainly in the North and Midlands, said fairer funding was vital to help “keep the wolf from the door”.
“Failing to do that will mean more cuts to services in deprived areas,” said the Labour council boss – who warned of the threat posed by Farage’s party.
Stoke-on-Trent City Council raised council tax by just under 5 per cent as it made £8m-worth of cuts and savings.
Jane Ashworth, the Labour council leader, said: “We’ve pretty much run out of edges to trim.”
The Institute for Fiscal Studies (IFS) has warned council tax bills are set to rise at their fastest rate for two decades, describing it as the “sting in the tail” of Reeves’s review.
Dr Kevin Muldoon-Smith, associate professor in public sector finance at Northumbria University, said many councils in Red Wall areas would “struggle to keep things on an even keel” in the years ahead.
A spokesperson for the Ministry of Housing, Communities and Local Government said it was determined to make progress “on the financial situation we have inherited in our councils”.
They added: “The spending review provides over £5bn of new grant funding for local services that communities rely on.”
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