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. Councils
will have more resources available to bring back libraries, youth
services, clean streets, and community hubs.
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the outdated system that saw some councils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 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, 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.
A new Recovery Grant Guarantee
will also protect upper tier councils
receiving this money, giving them above-inflation increases while
they adapt to the fairer funding system.
Council tax
The government will continue supporting councils as they move to
the new, fairer funding system.
All councils must still manage their budgets responsibly, and
council tax rises will be capped at 3 per cent per year with an
extra 2 per cent allowed for adult social care. It will be
entirely up to local leaders to raise that council tax.
In exceptional cases, councils can apply to raise taxes above
this limit – but only if their residents don't already
pay more than average.
Six councils with historically very low bills will
be given flexibility for 2 years with local
leaders given the choice to use the flexibility: Wandsworth,
Westminster, Hammersmith and Fulham, City of London, Kensington
and Chelsea, and Windsor and Maidenhead.
Around 500,000 households in these areas already
have very low bills, with Band D
households paying between £450 and £1,280 less in
council tax than the average English household.
This temporary measure gives them the option of
bringing their bills more in line with the rest of the country -
making the system fairer.
Social care
The government is building a National Care Service so
people get better quality care, more choice and control over
their support.
And ministers have confirmed around £4.6
billion extra is made available
for adult social care by 2028-29 to help make
this happen - including £500 million to
improve care workers' pay.
The government is also rolling out the
biggest transformation of children's social care in a generation
– backed by a historic £2.4 billion investment over the
multi-year Settlement.
The Settlement also includes other major changes to make the
system work better for councils and residents,
including:
-
Fairer housing incentives: letting councils keep
all additional council tax from new homes to
encourage local growth and home ownership.
-
Simplifying the system: cutting red tape
by streamlining 36 funding streams worth
more than £56 billion over three years and freeing
up councils to focus on residents' priorities
