England’s local authorities are set to receive a substantial financial injection of nearly £78 billion to support vital services following a significant revamp of the council tax system.
The funding boost will amount to a more than 23% increase in councils’ core spending power compared to the previous year, enabling them to cover essential services such as waste collection, housing provisions, and children’s welfare. Notably, the most economically disadvantaged 10% of councils will experience a 24% rise in funding per capita in a concerted effort to promote greater equity across the country.
Officials assert that this financial injection will empower councils to reinstate critical amenities like libraries, youth facilities, sanitation services, and community centers. As part of the reforms, council tax hikes will be limited to 3% annually, with an additional 2% earmarked for adult social care.
While councils can exceed the prescribed tax increase ceiling, it is contingent on their residents currently paying below the national average. Six councils with historically lower tax rates, including Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea, and Windsor and Maidenhead, will have the leeway to adjust their tax rates accordingly to compensate for the redistributed government funds to more economically disadvantaged regions.
This financial package marks the first long-term funding settlement in over ten years, offering councils a three-year financial roadmap. Secretary of State for Local Government Steve Reed emphasized the opportunity to reverse a decade of budget cuts and reinvest in crucial community services that have been eroded over time.
In a bid to establish a National Care Service, ministers have committed approximately £4.6 billion in additional funding for adult social care by 2028-29, with a portion dedicated to enhancing the wages of care workers. Moreover, a substantial £2.4 billion investment has been allocated for a significant overhaul of children’s social care, representing the most extensive reform in a generation.
Under the new provisions, councils will retain all supplementary council tax revenues generated from new residential developments to incentivize local growth and homeownership. Minister of State for Local Government and Homelessness Alison McGovern highlighted the targeted approach of the settlement, aiming to address long-standing systemic disparities and align funding with areas of greatest need. McGovern emphasized the pivotal role of this funding strategy in fostering opportunities, supporting families, and reconstructing essential community services to foster a more equitable society where all individuals have the chance to prosper.