Local Government Finance

Through the Fair Funding Review 2.0 reforms and the first multi-year Local Government Finance Settlement in a decade, we are introducing a fairer and evidence-based funding system. These updates will account for local circumstances, including for different ability to raise income locally from council tax. They will also account for the variation in cost of delivering services, including between rural and urban areas. In doing so, we will target a greater proportion of grant funding towards the most deprived places which need it most, ensuring the best value for money for government and taxpayers.

As a result, we expect that councils with social care responsibilities will see their Core Spending Power (CSP) increase in real terms over the multi-year Settlement, with most councils seeing their Core Spending Power increase in cash terms. By 2028-29, we expect that the 10% most deprived authorities will see a significant increase in their Core Spending Power per head compared to the least deprived.

While our reforms move funding to the places where it is most needed, the government recognises the challenging financial context for local authorities as they continue to deal with the legacy of the previous system. The government has therefore confirmed that it will continue to have a framework in place to support those in the most difficult positions. Any council that has concerns about its ability to set or maintain a balanced budget should approach the department in the first instance.