📊 Provisional Local Government Finance Settlement

• The government announced a provisional local government finance settlement for 2025-26, aiming to rebuild local government and address the financial crisis inherited from the previous administration.

• £4 billion in additional funding was announced for local government services, with £1.3 billion included in the current settlement and an additional £700 million in grants, including £200 million for social care.

• The provisional settlement will provide £69 billion, equivalent to a 3.5% real-terms increase in councils’ core spending power compared to 2024-25, with further increases expected in the final settlement.

• A one-off share of £100 million from the business rates levy account will be distributed to every authority in England to support local services.

• A £600 million recovery grant will be targeted at authorities with high deprivation and low tax bases, funded by repurposing existing grants, as part of broader reforms to funding starting in 2026-27.

• The government will maintain the previous administration’s council tax referendum principles, allowing a maximum increase of 5%, with flexibility for councils in financial difficulty.

• A consultation on local authority funding reform, starting in 2026-27, will address the drivers of cost, including demand, public service needs, and local revenue-raising capacity.

• £3.7 billion in additional funding is designated to help local authorities meet the increasing costs of social care, including a new children’s social care prevention grant.

• The government plans to introduce multi-year funding settlements from 2026-27, the first in 10 years, aiming for a more up-to-date assessment of councils’ needs and resources.

• Reforms include simplifying the local audit system in England, creating a more focused and value-for-money local audit office to replace the current dispersed system.

• Opposition figures expressed concerns about the adequacy of the funding and highlighted the challenges councils still face, including uncertainty over election costs and new statutory duties.

• The Liberal Democrats welcomed the multi-year settlements but expressed concern over the removal of the rural services grant and uncertainty around funding for special educational needs.

• The government responded to queries by emphasizing the need for a fair funding review and reform of social care to address long-term challenges faced by local councils.

The session exhibits a moderate level of disagreement, justifying a rating of 3 out of 5. The debate centers on the provisional local government finance settlement, with various MPs questioning aspects of the plan, particularly regarding the implications for rural areas, social care funding, and the broader fairness of the funding distribution. The Minister for Local Government and English Devolution, Jim McMahon, introduced the settlement with an emphasis on reversing the impacts of previous cuts and improving local government finances. Opposition MPs, while generally welcoming the additional funding, raised concerns about specific issues, such as the removal of the rural services grant and the potential shortfall in funding for special educational needs and disabilities (SEND). However, the session also shows a collaborative tone, with the Minister acknowledging the need for further reform and expressing willingness to address concerns through consultations and individual council support. The disagreement is evident but not highly confrontational, as there is a shared understanding of the importance of improving local government funding, despite differing views on the specifics of implementation.