Today, the Government have published details of the local government finance settlement for the next year for councils across England, and our wider ambitions for the sector over the course of this Parliament.
Councillors, officers and frontline staff are due our respect and appreciation for the work they have done to keep services going through very difficult times. This Government are under no illusion about the scale of the issues facing local government. We know that the demand for, and cost of, services has increased significantly— and that this has made the job for councils in recent years much harder. After a decade of cuts and fiscal mismanagement inflicted by the last Government, compounded by spiralling inflation and a failure to grow our economy, councils of all political stripes are in crisis. Our fiscal inheritance means that there will be tough choices on all sides to get us back on the path to recovery, and it will take time.
We are taking immediate action to address these challenges. The autumn Budget announced over £4 billion in additional funding for local government services, £1.3 billion of which will go through the local government finance settlement. Outside the settlement, the Government have also announced additional funding to support local government across a range of priorities, including special educational needs and disabilities and homelessness services, a guarantee for income from the extended producer responsibility for packaging scheme, as well as funding for local roads maintenance.
However, fixing the foundations of local government requires a programme of reform over the course of this Parliament. After years of delays, we will update the local government finance system. The current funding system is fundamentally broken, wasting taxpayers’ money and starving authorities of the funding needed to provide the services we all rely on. The previous Government agreed with us on the need to reform the system, proposing a similar approach in its fair funding review, but where they were unable to, we will finish the job by consulting on and implementing an up-to-date assessment of needs and resources, starting in 2026-27. This will be the first multi-year funding settlement in 10 years.
Reform of local public services, so that they focus on prevention, is also critical if we are to end the cycle of system failure and cost escalation. We will reform services that have for too long been overlooked by the previous Government to improve outcomes for the most vulnerable residents who rely on them—particularly children’s social care, homelessness and rough sleeping, special educational needs and disabilities, and adult social care services.
We will reset the relationship with local government, working as equal partners to ensure that the sector delivers continuous improvement for its communities, operates at the highest standards of probity, and provides value for money, all while giving the sector greater autonomy, certainty and flexibility. We will rebuild the system of accountability and oversight in local government, including through an overhaul of local audit, scrutiny and standards, and will consult on strengthening the standards and conduct framework for local authorities in England.