Government confirms over £64 billion funding package for councils

More than £64 billion to bolster council budgets in England and ensure they can deliver frontline services has been confirmed by the Levelling Up Secretary today.  

The final local government finance settlement for 2024-25 makes available up to £4.5 billion more for councils in England in 2024-25, an above-inflation increase of 7.5% on the previous year – with £64.7 billion for local government overall.   

The package includes the £600 million in extra support to bolster council budgets, including £500 million for social care, announced on 24 January. This support was announced following the consultation on the provisional local government finance settlement.  

The additional funding was welcomed by leading local government organisations such as the Local Government Association, County Councils Network and District Councils Network.  

The additional funding has been made possible because of the government sticking to the plan and making the right long-term decisions to deliver on our economic priorities of halving inflation - which has already more than halved - growing the economy and reducing debt.  

The government is also supporting all councils through the sector-wide Funding Guarantee, ensuring that all councils will see an increase in Core Spending Power of at least 4% before any local choices on council tax – an increase from the 3% announced at the provisional settlement.  

Councils will be able to increase council tax by up to 3% without a local referendum, with a further 2% for those responsible for adult social care services. The government’s manifesto commits to continuing to protect local taxpayers from excessive council tax increases. The referendum principles strike a fair balance and we have been clear local authorities must be mindful when taking any decisions relating to council tax. 

The Secretary of State has also confirmed additional council tax flexibilities today for some failing councils, reflecting the most serious of circumstances. This decision has been taken in light of the scale and nature of these failings, the individual council’s financial situation, and the need for ongoing government intervention to drive improvement and recovery. We have been clear to each of the councils that in implementing any additional increases, they should take steps to mitigate the impact on those least able to pay.  

Levelling Up Secretary Michael Gove:

“Today, I set out the final Local Government Finance Settlement for 2024-25. This makes available up to £64.7 billion for local authorities in England, an increase in Core Spending Power of up to £4.5 billion, or 7.5% in cash terms, on 2023-24.   

“This settlement, and the changes we have made to address concerns raised through the consultation, will provide local authorities with the tools to support their local communities, continue to reform their services for the long-term, and to help communities prepare for the future.” 

The final local government finance settlement includes:  

• A total funding package for councils worth £64.7 billion for the next financial year – an increase of up to £4.5 billion or 7.5% in Core Spending Power compared with 2023-24.
• The most relatively deprived areas of England will receive 18% more per dwelling in available resource through this settlement than the least deprived areas.
• £1.5 billion in additional funding for social care compared to 2023-24, bringing the total grant funding for social care through this settlement to £8.7 billion.
• An extension to the Funding Guarantee to ensure every council sees at least a 4% increase in Core Spending Power before any council tax decisions locally.
• A £15 million increase in the Rural Services Delivery Grant, rising to £110 million in 2024-25, in recognition of the additional costs faced by councils serving dispersed populations.
• An additional £3 million for the Isle of Wight and £0.15 million for the Isles of Scilly, in recognition of the unique circumstances facing island authorities.
• Stability for councils by maintaining our approach to other grants, such as continuing to increase the Revenue Support Grant in line with the Consumer Price Index.

As part of our efforts to return the sector to sustainability in the future, we are also asking local authorities to develop and share productivity plans.  

We ask for plans to be published by July 2024 before the House rises for the summer recess. Plans must be agreed by Council Leaders and members and published on local authority websites, together with updates on progress. We expect them to cover four main areas:   

1. transformation of services to make better use of resources;
2. opportunities to take advantage of advances in technology and make better use of data to inform decision making and service design;
3. ways to reduce wasteful spend within systems, including specific consideration of expenditure on consultants and discredited staff Equality, Diversity and Inclusion programmes – this does not include programmes designed to promote integration and civic pride, and counter- extremism; and
4. barriers preventing activity that Government can help to reduce or remove.

Alongside this ask, we will establish a new productivity review panel, made up of sector experts including the Office for Local Government and the Local Government Association. 

The government remains clear that the ‘four day working week’ and other equivalent arrangements of part time work for full time pay do not deliver value for taxpayers. Following consultation on levers in future financial settlements, the government will carefully consider responses as part of wider policy development.  

Further information:   

• Further details on all of the above, including allocations for individual councils and the summary of responses to the provisional settlement consultation, can be found on the final local government finance settlement page: https://www.gov.uk/government/collections/final-local-government-finance-settlement-england-2024-to-2025
• The final local government finance settlement follows the provisional local government finance settlement on 18 December 2023, and the consultation on this which closed on 15 January 2024. Having listened to the views of local government, on 24 January 2024 the government announced £600 million in extra support to bolster council budgets.
• The statutory reports which make up the final settlement will be considered by Parliament on 7 February 2024.
• 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.