Communities set to benefit from fairer funding
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Councils most in need will have more money to bring back
clean streets, fill potholes and restore
local services through an extra £440
million funding boost confirmed today (February
9). Around £78 billion is being made
available for councils across England through the Final
Local Government Finance Settlement with a top up to the
Recovery Grant for areas hit hardest...Request free trial
Councils most in need will have more money to bring back clean streets, fill potholes and restore local services through an extra £440 million funding boost confirmed today (February 9). Around £78 billion is being made available for councils across England through the Final Local Government Finance Settlement with a top up to the Recovery Grant for areas hit hardest by historic cuts. This record-breaking package marks a turning point in the way local government is funded, using a new evidence-based approach – including the latest Indices of Multiple Deprivation – that properly recognises local need and the true costs of providing services in deprived areas. Councils have also been told how much they can expect to receive over the next three years as part of the first multi-year finance settlement in a decade, giving places the certainty they need to plan ahead, make savings and transform local services. The funding announced today brings the total new investment in local services to over £5.6 billion over the next three years and also provides an additional £740 million in funding between the provisional and final settlement. Other measures set out include:
Secretary of State for Housing, Communities and Local Government, Steve Reed said: We inherited a system where the communities that needed the most support were left behind. Today we're turning the page. This £78 billion settlement is about real change – potholes filled, streets kept clean, older people looked after, and young people having somewhere to go in their area. And with an extra £440 million for areas hardest hit by historic cuts, we're making sure every community gets its fair share. Minister of State for Local Government and Homelessness, Alison McGovern MP said: We promised to reconnect funding to deprivation — and this final Settlement delivers on that promise. With more new funding, we're giving councils the certainty they need to plan ahead and transform services. Our purpose is to support families, tackle homelessness before it happens, and finally giving communities worst affected by historic cuts their fair share. That's how we rebuild this country.” Deprived Communities Residents in areas hardest hit by historic funding cuts will see greater investment in local services, with a £440 million boost to the Recovery Grant meaning £2.6 billion has now been made available to them. The boost will help councils in these areas invest in the everyday services people rely on, from keeping streets clean and parks maintained, to supporting local libraries, leisure centres, and youth clubs. It will also help councils modernise how they deliver services, so residents see real improvements in their day-to-day lives. By directing more funding to where it is needed most, the government is addressing long-standing imbalances that saw some of the country's most deprived communities receive less support than better-off areas. SEND Rising demand for SEND support has left councils struggling to balance their budgets, forcing many to rack up significant deficits. To help tackle this, the government has today confirmed 90% of these historic deficits up to 2025-26 will be written off through the largest intervention on SEND deficits ever. All local councils with a SEND deficit will be eligible to receive grant funding, subject to securing approval of a SEND local reform plan. This will protect councils' ability to support children and young people with SEND, alongside delivering wider services and tackling deprivation. This is a first step. The government will set out full plans in the Schools White Paper, which will outline reforms to create an inclusive education system that enables all children to achieve and thrive, while bringing about financial sustainability for councils. Homelessness Vulnerable people at risk of homelessness will get more help to find suitable, stable housing. A total uplift of £272 million is being invested in the Homelessness, Rough Sleeping and Domestic Abuse Grant, bringing total funding to over £2.7 billion. Of this money, £159 million is for supported housing and will target 40 local areas with the greatest need to help prevent homelessness and rough sleeping before it occurs. The remaining funding includes £50 million to support councils with new responsibilities under the Renters Rights Act, £45 million for homelessness prevention, and £19 million to tackle domestic abuse. Mayors England's regional economies will benefit from better local transport, more homes, and improved job opportunities as regional mayors gain new funding to invest directly in their regions. The final Settlement provides an additional £39.6 million of mayoral capacity funding to achieve this, as well as an additional £99 million to deliver supported housing services for vulnerable people. Taken together, this brings the total funding for mayors to almost £435 million over the multi-year Settlement through the Mayoral Capacity Fund and the Homelessness, Rough Sleeping and Domestic Abuse grant. Local Outcomes Framework Instead of Whitehall micromanaging council spending, the government is focusing on the outcomes that matter most to people – housing, jobs, care, and public services. The new Local Outcomes Framework sets out top priorities for councils to deliver with their local partners, including police and schools. It will take effect from 2026/27. Council Tax Households will continue to be protected from excessive council tax rises, with increases capped at 5% for the vast majority of councils (3% plus 2% adult social care precept) - as set by the previous government. Seven councils facing financial challenges have today been granted limited additional flexibility at their request, in line with previous administrations' approach. They are Bournemouth, Christchurch and Poole (1.75%), Warrington (2.5%), Trafford (2.5%), Windsor and Maidenhead (2.5%), and Worcestershire (4%), Shropshire (4%), and North Somerset (4%). In almost every case, the agreed rises are lower than the councils have requested to ensure taxpayers are protected. No area with additional flexibility will see their bills pushed above the national average. Overall, the average council tax increase across England is not expected to exceed last year's average. The government has also granted six Police and Crime Commissioners an additional £3.50 council tax flexibility, and one fire authority an additional £5, to help them manage significant sector pressures and maintain public safety. This is separate from the bespoke flexibilities previously granted to six councils with historically low levels of tax from 2027/28, as they transition to the new and fairer funding system. Business rates Ministers have listened to feedback and made technical changes so the government more accurately reflects councils' current income from local business rates pooling arrangements. This technical adjustment has the practical effect of shifting money between authorities in an area towards councils responsible for social care, which is in line with our overall objective to get funding to where it is needed most. To help councils adjust to this change, the government will provide a one-off Adjustment Support Grant in 2026-27 to authorities who would otherwise see their Core Spending Power reduce in 2026-27, compared to indicative allocations set out at the provisional Settlement. Allocations for this grant are set out within the final Settlement. Notes to editors
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