Local Government Finance
The question
To ask the Secretary of State for Housing, Communities and Local Government, what steps she is taking to support local authorities in receipt of exceptional financial support to resolve funding issues in the long term.
Answered by Jim McMahon
The Government recognises the significant pressures that councils are facing. The Spending Review provides over £5 billion of new grant funding over the next three years for local services that communities rely on. The £3.4 billion, when taken together with a 3% core council tax referendum principle and a 2% adult social care precept, results in an average overall real terms increase in local authority core spending power of 2.6% per year over the next multi-year settlement (2026-27 to 2028-29).
The government is committed to fixing the foundations of local government through ambitious reform. The Fair Funding Review 2.0 is open from 20 June to 15 August and seeks views on the approach to local authority funding reform through the Local Government Finance Settlement from 2026-27.
In line with our commitment to support councils’ receiving Exceptional Financial Support to improve, as a condition of the support agreed councils will be subject to additional external assurance to give them independent and expert help to drive local improvement and manage their financial position.
Finally, we also followed through on our commitment to not make borrowing more expensive for those councils in the most financial difficulty, by removing the condition requiring a 1% premium on borrowing from the Public Works Loan Board (PWLB).
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