Local Government Finance: Disadvantaged
The question
To ask the Secretary of State for Housing, Communities and Local Government, what steps he is taking to ensure that local authorities within the most deprived decile receive above average increases in Core Spending Power in each year of the local government funding settlement.
Answered by Alison McGovern
Following extensive consultation and engagement, we are realigning funding distributed through the Local Government Finance Settlement with need and deprivation. These updates will account for local circumstances, including for different ability to raise income locally from council tax. By using the most up to date data available, the government will be able to assess local authorities' relative demand for services more effectively. This includes using the most up to date 2025 Indices of Multiple Deprivation in our assessment of need.
We introduced the £600 million Recovery Grant in 2025-26 to support the most deprived local authorities. Following a large number of representations, the government has consulted on its plans to maintain the Recovery Grant across the multi-year Settlement; and to provide a Recovery Grant Guarantee, ensuring that upper-tier authorities in receipt of Recovery Grant see an increase of at least 5% in 2026-27, 6% in 2027-28 and 7% 2028-29, compared to their 2025-26 income, subject to a cap of £35m.
As a result of our reforms, the most deprived places – such as Blackpool – will see increases in government funding which ensure that their Core Spending Power per head will on average be higher than in less deprived places.
The government is considering the responses received following the consultation of the Provisional Local Government Finance Settlement 2026 to 2027 and will set out a position when the final Settlement is published in early February.
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