- Provisional Local Government Finance Settlement to provide £69 billion overall for councils across the country
- Councils in England to see on average a 3.5% real-terms increase in Core Spending Power with £2 billion additional grant funding for 25/26, including a £700m top up announced today
- £600 million through a new Recovery Grant to help support places most in need
- As part of this, £3.7 billion will be made available to social care authorities through the Settlement to strengthen community care, invest in prevention and give children the best start in life
- As part of our Plan for Change to rebuild Britain, we are fixing the foundations of local government, fundamentally reforming how councils are funded to make better use of public money, overhauling the local audit system and protecting local taxpayers from excessive council tax increases
£69 billion of funding will be injected into council budgets across England to help them drive forward the government’s Plan for Change through investment and reform and to fix the foundations of local government, ministers have announced today (Wednesday 18th December).
The provisional Local Government Finance Settlement will provide £69 billion for councils across the country, a real-terms increase of 3.5% from 2024-25, which includes a new emergency £600 million Recovery Grant, offering better value for money through the repurposing of grants to help support councils most in need and maximise every penny of public spending to ensure it delivers for working people.
And £3.7 billion of funding will be made available to social care authorities to support adult and children’s services through the Settlement. This includes £880 million for the Social Care Grant – an increase of £200 million compared to what was indicated last month, taking its total to £5.9 billion – which will support councils to deliver care for adults and children in their communities, helping to reduce pressure on the NHS.
No council will see a reduction in Core Spending Power. Places with a significant rural population will on average receive around a 5% increase in their Core Spending Power to ensure rural communities have the support they need. We are maintaining the previous government’s referendum threshold for council tax , which will be maintained at 3% with 2% for the adult social care precept to protect local taxpayers
And laying the groundwork for wider children’s social care reform, today an increase to the new Children’s Social Care Prevention Grant has been confirmed, which will be uplifted from £250m to £263 million at the final Settlement early next year. This is a step towards ensuring children get the best start to life as set out in our Plan for Change. This will fund a national rollout of Family Help, a preventative service at the core of children’s social care reform, and will make funding available to help ensure that children can stay with their families or in safe loving homes wherever possible.
This mission-led government is determined to bring growth to every corner of the country, and local councils are crucial in this journey to deliver the change communities need – from building the 1.5 million new homes, helping to grow their local economies, and delivering the strong local services communities rely on.
Deputy Prime Minister, Angela Rayner said
Local leaders are central to our mission to deliver change for hard-working people in every corner of the country through our Plan for Change, and I know our councils are doing everything they can to stay afloat and provide for their communities day in day out.
We won’t take the easy option or shy away from the hard work needed to rebuild a more effective and efficient system. These kind of reforms won’t happen overnight, but we are determined to deliver fairer funding, ending postcode lotteries meaning everyone gets the support from public services they deserve.
Minister of State for Local Government and English Devolution, Jim McMahon said
We know councils are calling out for help which is why we have prioritised this vital increase in funding, but we must stop taxpayers’ money being thrown into a broken system.
As a former council leader I know too well that councils have suffered from short-term solutions. But we will fix this outdated system, turning to our partners in local government, working hand in hand to bring ambitious reform and do the long-term, necessary work to rebuild the foundations, and crucially, trust.
Alongside the additional money announced today, the government will be giving the sector a say on how we fundamentally fix the current funding system from 2026-27. By distributing public funding more fairly, based on an up-to-date assessment of need, we will deliver better value for money for taxpayers so that councils across the country can deliver high-quality services. This builds on the ‘Fair Funding Review’ carried out by the previous government, which highlighted the need for change but was never implemented. We will go further, ousting the resource-heavy bureaucracy of bidding for different funding pots
In 2026-27 the government will bring forward the first multi-year settlement in a decade to provide greater certainty and stability to councils and ensure that every penny of taxpayer cash provides value for money through a more streamlined and efficient delivery system.
The government is determined to make the tough decisions and fix the foundations of the local government sector, with skyrocketing demand on services and top-down Westminster-centric decision-making that has left local leaders struggling to deliver the public services communities need.
The need to restore transparency and accountability over how public money is spent is clear, which is why the government has been clearing the audit backlog and is carrying out a systematic overhaul of the broken local audit system. Local audit should be the bedrock of local accountability and transparency, of trust and confidence in councils to spend taxpayer money wisely. The strategy for overhauling local audit, published today, sets out a range of measures for rebuilding the system including, as announced in the English Devolution White Paperthis week, the creation the Local Audit Office. This will streamline, simplify and bring the different functions in the current system together. It will be proportionate and do only what its name says – we are not recreating the bloated Audit Commission.
And as part of a determination to ensure that local government throughout the country is fit, legal and decent, today a ten-week consultation has launched on strengthening the Standards and Conduct Framework in England. Views are being sought on a range of proposals including mandating a model code of conduct, strengthening the investigation processes for code of conduct breaches, and introducing the sanction of suspension.
By getting councils back on their feet and giving local leaders more control, stability and certainty over their spending we will deliver better services for taxpayers and boost local economies. Equipping and empowering councils with new Social Care funding will help reduce the strain on the NHS and ensure every child in Britain gets the best start in life as part of our Plan for Change.
Further information
Further details on all of the above, including allocations for individual councils and our consultation document, can be found on the provisional local government finance settlement page 2025-26 here.
The government’s consultation on funding reform from 2026-27 can be found here.
Core Spending Power is a measure of the resources available to local authorities to fund service delivery. It sets out the money that has been made available to councils through the local government finance settlement.
The provisional local government finance settlement includes
The government confirmed it will provide £515m of funding at the final local government finance settlement to support to local government meet the increased costs of directly employed staff arising from changes to employer National Insurance Contribution (NICs).
The previous government’s referendum threshold for council tax will be maintained at 3% with 2% for the adult social care precept to protect local taxpayers.
Several grants including the Rural Services Delivery Grant and the Services Grant will be repurposed. The government will ensure the impact of rurality on the cost of service delivery and demand is reflected in the public consultation next year. Places with a significant rural population will still on average receive around a 5% increase in their Core Spending Power. No council will see a reduction.
Councils will also receive over £1 billion in total through the Extended Producer Responsibility for Packing scheme (pEPR) which will cover the existing costs they incur for managing household packaging waste, provide additional funding for new legal duties, and support much needed investment in the waste and recycling industry.
The government will provide confirmation of the final local government finance settlement once the four-week consultation has closed and all responses have been considered in early 2025.
Minister McMahon’s full Written Ministerial Statement is available here.
Further information on local audit reform, is available here.
- Further information on the Local Government Standards and Conduct Framework consultation, is available here.
The full English Devolution White Paper can be found here.
