England’s local councils are set to receive a significant funding increase of nearly £78 billion to support essential services following a major reform of council tax. This boost, amounting to a rise of over 23% in core spending power compared to the previous fiscal year, is intended to cover various services such as waste collection, housing, and services for children. Notably, the most disadvantaged 10% of councils will experience a 24% increase in funding per capita in an effort to promote greater equity across the country.
Government officials highlight that this financial injection will empower councils to reinstate vital amenities like libraries, youth services, and community facilities, as well as enhance street cleanliness. The restructuring also includes a cap on annual council tax increases at 3%, with an additional 2% allowance earmarked for adult social care.
While councils are generally restricted to the set tax increase limits, exceptions will be made for six councils with historically low tax rates, including Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea, and Windsor and Maidenhead. These councils will have the flexibility to raise taxes beyond the capped limit to compensate for the redistribution of government funds to less affluent regions.
This funding injection represents the first multi-year financial settlement for local councils in over ten years, aiming to provide stability and predictability for the next three years. Steve Reed, the Secretary of State for Local Government, emphasized the opportunity to reverse a decade of austerity measures and reinvest in essential community services to support local residents.
In addition to the general funding increase, a substantial amount – around £4.6 billion – will be allocated for adult social care by 2028-29, with a specific focus on enhancing care worker salaries. The government also plans to implement extensive reforms in children’s social care, backed by a historic £2.4 billion investment across the multi-year settlement.
As part of the overhaul, councils will retain all additional council tax revenue generated from new properties to incentivize local development and homeownership. Alison McGovern, Minister of State for Local Government and Homelessness, stressed the importance of directing funding towards areas with the highest need, aiming to address systemic inequalities and empower local communities to thrive and rebuild essential services.
The funding settlement is designed to create a more equitable society and provide opportunities for all individuals to achieve success.
