Over £69 Billion Confirmed For Council Budgets
More than £69 billion in funding for England’s councils has been confirmed today as the government delivers on its commitment to restore trust and stability in public services, with the final local government finance settlement for 2025 to 2026 making available up to £3.7 billion in additional funding for social care authorities.
Following the provisional Settlement in December, today’s (February 4) final Settlement provides a 6.8% in cash terms increase in councils’ Core Spending Power compared to 2024-25. With increased demand and running costs rising, this money is a lifeline and will guarantee no council sees a decrease in their Core Spending Power.
With families across the country relying on crucial council services such as social care, the government is to provide up to £3.7 billion additional funding to social care authorities which they say will deliver this.
The settlement also includes an £880 million uplift to the Social Care Grant, compared to 2024-25.
A new £270 million Children’s Social Care Prevention Grant will support the national roll out of vital family help, keeping children safe and ensuring they get the best start in life as set out in the Plan for Change.
The £60 million has also been confirmed to fund long-term improvements to the local government sector over the next year, including empowering mayoral areas leading the devolution revolution in delivering local priorities and supporting councils’ financial reporting with a fit and legal audit system to ensure transparency.
Deputy Prime Minister, Angela Rayner said:
“Councils deliver vital services across the country – driving growth and local economies and providing a lifeline for those that need it most. “
“Through our Plan for Change we are determined to fix the foundations of local government; investing where it is needed, trusting local leaders and working together to deliver growth, better health and social care services and the affordable homes people need.”
This final Settlement marks an important step towards a government focused on efficiency, value-for-money and a community first approach. For the first time, a new £600 million Recovery Grant will help support places most in need, which maximises public spending to ensure it delivers more meaningful outcomes.
The sector is already having its say via an open consultation on how to best streamline the outdated funding model and distribute taxpayer’s money more fairly, based on an updated assessment of need, enabling every council to deliver high quality services to their communities.
As part of handing local leaders more power and control of their funding, the government will end outdated processes and bureaucracy of bidding for different funding pots and bring forward the first multi-year settlement in a decade in 2026-27 to provide certainty and economic security to councils setting budgets.
The provisional settlement consultation was open for 4 weeks and closed on 15 January 2024.
Cllr Barry Lewis, Finance Spokesperson for the County Councils Network, said:
“Today’s final Local Government Finance Settlement will be a disappointing one for the majority of county and unitary councils, and sets up a difficult twelve months for those authorities. With the government choosing to heavily target its £600m ‘Recovery Fund’ to local authorities covering major cities and towns at the expense of county areas, just 3% of this grant will go to County Councils Network (CCN) councils.”
“Compounding this is the increase in the National Living Wage and employers’ National Insurance, with the costs of these policies outweighing any additional funds made available in this finance settlement for county and unitary councils.”
“Consequently, more than four in five CCN members say they are in a worse position than before the Autumn Budget and this finance settlement, and one third say their service reductions next year will now be severe. Considering there is very little fat left to cut from many of these services already, a further reduction will have a material impact on our residents.”
“It is important that decisions made in the finance settlement and the manner in which they have been made does not set a precedent ahead of the upcoming fair funding review. There has been nothing published so far that backs up ministers’ decisions to target funding so specifically by exclusively using deprivation within the funding formula, so it is imperative the fair funding review is carried out transparently.
“Whilst deprivation is a reason some councils’ costs are high, it is not the sole reason. The CCN’s evidence shows that demand and market failure across adult and children’s social care and special educational needs services are the main reasons as to why councils across all four corners of the country are struggling. If the trend of this finance settlement does continue, the government will completely understate the very real financial pressures faced by councils outside of towns and cities and it will push many county and unitary councils to the brink.
“The Local Government Secretary’s written statement today also references ending the ‘two-tier’ premium paid by taxpayers in county areas, and mending this broken system. If the government is to achieve its aim of streamlining local government, reform must be at the correct scale to make a difference to public services and to generate efficiency savings. That means building on the principle of new unitary councils covering populations of 500,000 people or more.”