£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.
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.
