Local Government Finance Settlement 2026/27 to 2028/29

The government published the final Local Government Finance Settlement for 2026/27 to 2028/29 on 9 February 2026. This settlement distributes £83.5 billion to local authorities in 2026/27, rising to £90.5 billion in 2028/29. Most of this is in the form of un-ringfenced funding and council tax revenue.

Changes in funding

The funding in this settlement is distributed using new formulas set in the Fair Funding Review 2.0. This is the first full assessment of local authorities’ relative levels of need since 2013. The new formulas mean that some local authorities (particularly those in cities with high levels of deprivation) will have higher spending power than in previous years, while others (particularly rural shire districts and authorities with very low council tax rates) will have less to spend.

Many existing grants are being simplified and rolled into larger grants in this settlement. In particular, a number of funding streams are being consolidated into the un-ringfenced Revenue Support Grant, while others will make up four ringfenced grants covering things like homelessness, children and families, and public health.

Several forms of transitional funding are included in the settlement, to avoid local authorities experiencing large changes in funding in a single year. Much of this funding will go to only a few authorities, and it can be a significant source of their income.

Other changes in the settlement

The government has set “referendum principles” in this settlement (limits on the amount by which local authorities can raise their council tax rates without holding a referendum). The principles are very similar to those in recent years. Several authorities are to be permitted to increase council tax rates by more than the standard proportions. The government has also proposed setting no principles for a few authorities which have low council tax rates.

The government has also said that it will extend the statutory override allowing local authorities to run deficits related to Special Educational Needs and Disabilities (SEND) until 2027/28, and will assume responsibility for funding SEND centrally from 2028 onwards. It will provide funding of approximately £5.6 billion to cover 90% of SEND deficits accrued up to 2025/26. The government has said that it plans to announce further assistance with deficits that accrue in 2026/27 and 2027/28.

Longer-term context

This settlement comes in a context where, as of 2025/26, local authority core spending power is still about 9% in real terms below its 2010/11 levels in England as a whole (and much lower for some authorities).

The overall trend over the years of this settlement is generally for funding to increase. However, because of the large changes in the set of grants included in the settlement, we cannot make any meaningful comparisons between the amounts of funding that councils will receive in this settlement with the amounts that they received in previous years.