£78bn for Councils in Turning Point Settlement to Cut Deprivation
England’s councils will have almost £78 billion made available for essential services next year with more money going to places with the greatest need under a radical overhaul of how local government is funded.
The funding injection is aimed at restoring pride and opportunity in left behind places, to get back what has been lost.
The Settlement confirms that this will be the first multi-year Settlement in a decade, running from 2026/27 to 2028/29. As part of this:
• An additional £4.6bn is being available for adult social care in 2028/29 compared to 2025/26, which includes the £500m for the first Fair Pay Agreement.
• The government is consolidating key adult social care grants to local government into an unringfenced Revenue Support Grant and distributing this using a new Fair Funding Assessment.
• The Local Authority Better Care grant will remain ringfenced and will be pooled into the Better Care Fund.
• DHSC will set out adult social care notional allocations for each local authority over the multi-year Settlement intended as a reference point to support local councils in decisions on adult social care spending.
The Government has said it is also committed to establishing a National Care Service designed to enhance care quality while providing individuals with greater choice and control over their support arrangements.
The money is part of the first multi-year funding Settlement in over a decade, giving councils three years of financial certainty so they can plan ahead rather than firefight year to year.
In total, by the end of this multi-year Settlement, councils will see an increase of over 23 per cent in their core spending power compared to 2024-25 to pay for services including bin collections, housing, and children’s services.
And in a turning point for the way local government is funded, the outdated system that saw some councils build up savings while others faced financial collapse has been replaced.
Instead, places are now being funded using an evidence-based system that properly recognises local circumstances and the true costs of providing services in deprived communities.
The most deprived 10 per cent of councils will see a 24 per cent per head boost to the funding available to them as a result.
All councils will be protected financially during this change, with the change to new funding amounts being phased in gradually to keep services running smoothly for residents.
Secretary of State Steve Reed said: “This is a chance to turn the page on a decade of cuts, and for local leaders to invest in getting back what has been lost – to bring back libraries, youth services, clean streets, and community hubs.
“Today we’re making sure every community has the funding they need to succeed.
Minister of State for Local Government and Homelessness, Alison McGovern said:
Deprivation doesn’t happen by accident – it’s the result of years of broken systems and wrong priorities. This settlement tackles that head-on by directing funding where it’s needed most.
“By fixing the link between funding and deprivation, we’re giving local areas the tools to create opportunities, support families, and rebuild the services that hold communities together. This is how we deliver a fairer Britain where everyone has the chance to succeed.
The £600 million Recovery Grant introduced last year will continue throughout the three-year settlement, targeted at areas hit hardest by years of underfunding.
Vic Rayner, CEO of National Care Forum said: “We welcome the publication of the first multi-year settlement in a decade as this should enable local authorities to better enable a more strategic approach to adult social care commissioning. Moves to implement a fairer funding system for local government based on updated data on needs and costs are also welcome.
“However, we recognise and share the concerns raised by many within local government around redistribution and the very real risks present in the delivery of social care, particularly in parts of the country where people are already finding it difficult to access care and support services.
“Our biggest concern with today’s announcement is the decision to unringfence the majority of adult social care grants to local government, including the £500m committed specifically for the Fair Pay Agreement for care workers. The consolidation of key adult social care grants into a non-ringfenced Revenue Support Grant, puts adult social care funding at enormous risk due to wider public and political pressures, combined with commitments at a local level. It is also unclear how a nationally negotiated Fair Pay Agreement can be agreed with any confidence when local allocations are not protected for this purpose. Without further details of how performance against ‘notional allocations’ will be determined, it is difficult to see that these allocations offer any more than cold comfort in the face of the already challenging funding situation of local government as a whole.”
