The Government’s finance policy statement, published in late November, outlined its intentions for the provisional local government finance settlement for 2025/26.
The statement set out proposed changes to how local government is funded, and included a commitment to multi-year settlements for councils.
The LGA has worked hard to set out the benefits of investing in prevention, rather than a reactive, demand-led model to service spending, so it was positive that the paper also signalled a greater focus on funding for preventative services.
We now await the provisional finance settlement – which we expect to be published the week commencing 16 December – so we can fully understand the implications of the announcements for individual councils.
The extra funding in October’s Budget will also help meet some, but not all, of the significant pressures in adult and children’s social care, special educational needs and disabilities (SEND), and homelessness support.
However, it is vital that the provisional finance settlement also now fully funds the changes to employer National Insurance contributions included in the Budget.
Our new analysis shows that these additional costs will lead to a £637 million increase in councils’ wage bills for directly employed staff, and up to £1.13 billion in indirect costs via external providers, including up to £628 million for commissioned adult social care services.
Without action, we know that councils will be forced to make further cuts to statutory services, and risk not fulfilling some of their most important duties.
The LGA remains clear that immediate financial support and long-term funding reform and certainty – alongside a focus on preventative spending – are essential to protect services and enable councils to help tackle our national challenges, from social care to housing, inclusive economic growth, and tackling climate change.