Commons Sense

House of Commons · Ministerial Statement

Local Government Finance 2025-12-17

17 December 2025 · 48 other contributors

Opened by The Minister for Local Government and Homelessness Alison McGovern

Summarised by AI from the official record, so it can contain mistakes.

At a glance

The Minister for Local Government and Homelessness raised concerns about local government finance 2025-12-17 in the House of Commons. A government minister responded. Other MPs also contributed.

Key points

  • Today the minister announced a new local government finance settlement with over 5 billion in new grant funding for local services over multiple years.
  • The settlement aims to break the link between funding and deprivation to address poverty and inequality.
  • A recovery grant guarantee provides an above-real-terms increase to social care authorities.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Government Statement

Today, the minister announced a new local government finance settlement that includes over £5 billion of new grant funding for local services over a multi-year period. The settlement breaks the link between funding and deprivation, aiming to address the economic and social costs of poverty and inequality. It introduces a recovery grant guarantee providing an above-real-terms increase to social care authorities, and simplifies 36 funding streams worth more than £56 billion. By 2028-29, core spending power for local government is set to reach over £84.6 billion, representing a significant cash-terms increase compared with 2025-26. The settlement also addresses issues in children's social care, special educational needs and disabilities (SEND) provision, and homelessness prevention strategies. However, the minister acknowledges that past funding systems left local government in chaos, necessitating national change to empower councils.

Other contributors (48)
  • David Simmonds Con Ruislip, Northwood and Pinner

    Question

    The MP asked about the impact of rising taxes on local councils dealing with economic pressures. He criticised the settlement for punishing efficiency, introducing new hospitality taxes, and implementing a homes tax that costs the Treasury money.

  • Florence Eshalomi MP Lab/Co-op Vauxhall and Camberwell Green

    Question

    The Minister mentioned that the Government will be looking at the council tax freeze in some areas, and at lifting referendum principles. Can the Minister provide a clear timeline for when councils will receive certainty on the SEND deficit?

    Minister reply

    Multi-year settlements allow councils to plan properly and undertake commissioning activities over a longer period of time. Local authorities will not be expected to fund costs from general funds once the statutory override ends in 2028. We will have more to say on that throughout this settlement process.

  • Zöe Franklin MP LD Guildford

    Question

    Can the Minister provide a clear timeline for when councils will receive certainty on the SEND deficit?

    Minister reply

    Local authorities will not be expected to fund costs from general funds once the statutory override ends in 2028. We are building a national care service, backed by about £4.5 billion of additional funding for adult social care in 2028-29, compared with 2025-26.

  • Helen Hayes MP Lab Dulwich and West Norwood

    Question

    When does the Minister expect to be able to set out more detail on how councils will be supported to reduce the need for temporary accommodation and to bring the costs down?

    Minister reply

    Last week I set out our strategy to counteract that terrible phenomenon and I will talk in detail to councils in the weeks and months to come to do exactly as she asks.

  • Simon Hoare MP Con North Dorset

    Question

    What this proposed settlement will do specifically to address higher costs of delivering services in rural areas?

    Minister reply

    We are including a journey times adjustment in our assessment of cost for all services. We are also increasing the cap in the home-to-school transport formula from 20 miles to 50 miles, and including a remoteness adjustment in the adult social care formula.

  • Greg Smith Con Mid Buckinghamshire

    Question

    The Minister said she did not want to look the other way, but rural communities are being overlooked. Given that rurality has been removed from formula decisions except for adult social care, can she explain how areas like Buckinghamshire will be properly funded?

    Minister reply

    We have recognised extra cost pressures in certain areas and included them in our data analysis. The new deprivation statistics provide a more detailed picture of poverty wherever it exists, whether in rural or urban areas.

  • Clive Betts Lab Sheffield South East

    Question

    I welcome the Minister’s comments about tackling deprivation but challenge her on council tax reform and long-term changes to social care funding. Can she start conversations across parties for a long-term settlement?

    Minister reply

    The Government are committed to fixing social care for the long term, as highlighted in Baroness Casey's report which will drive us towards that vision.

  • Tim Farron LD Westmorland and Lonsdale

    Question

    Given Westmorland and Furness’ unique situation as England’s most rural council with high social care needs, can the Minister meet me to discuss a solution for our 13% budget cut over three years?

    Minister reply

    I am willing to meet the hon. Gentleman and any colleagues he wishes to bring, to go through the numbers in detail.

  • Andrew Cooper Lab Mid Cheshire

    Question

    Can the Minister provide more information on what this settlement means for Northwich, Winsford and Middlewich, and when councils will get certainty about the future of the statutory override?

    Minister reply

    We are committed to properly funding authorities in Cheshire to support essential services. Significant increases in spending power have been allocated to those authorities.

  • Rebecca Smith Con South West Devon

    Question

    Can the Minister reassure constituents that prudence and good decision-making by local councils will not be penalised under local government reorganisation?

    Minister reply

    We value prudent decisions made by local authorities, and we aim to ensure these efforts are recognised during the reorganisation process.

  • Andrew Lewin Lab Welwyn Hatfield

    Question

    Welwyn Hatfield will benefit from a £9 million increase. Will the Minister guarantee that need after housing costs will continue to be a key part of assessing deprivation?

    Minister reply

    We are committed to identifying poverty and deprivation based on evidence, including factors such as housing costs.

  • Ian Roome LD North Devon

    Question

    Could the Minister describe what percentage the remoteness element will represent for places like Devon and North Devon district council?

    Minister reply

    I will write to the hon. Gentleman with specific details about his area, including how the remoteness formula affects funding.

  • Preet Kaur Gill Lab/Co-op Birmingham Edgbaston

    Question

    Does the Minister agree that only Labour can be trusted to invest in Birmingham given our eight-year fight for fair funding?

    Minister reply

    The Government are committed to investing in Birmingham through today’s fair funding settlement, including £160 million of Pride in Place funding.

  • Ellie Chowns Green North Herefordshire

    Question

    Welcomes the shift to multi-year funding settlements but expresses concern about continued funding reductions for North Herefordshire and Herefordshire council, urging recognition of additional costs due to rurality.

    Minister reply

    Acknowledges concerns over rural funding and commits to engaging with all councils, including those in rural areas like Herefordshire.

  • Imran Hussain Lab Bradford East

    Question

    Questions whether the new formula will ensure Bradford, one of the most deprived areas, receives its fair share.

    Minister reply

    Confirms commitment to addressing deprivation in places like Bradford and emphasises the importance of supporting young people there.

  • Bradley Thomas Con Bromsgrove

    Question

    Asks if Labour is involved with Reform to increase council tax by 10%, as reported.

    Minister reply

    Denies being in cahoots with Reform and offers to respond formally to any concerns raised.

  • Andy Slaughter Lab Hammersmith and Chiswick

    Question

    Invites the Minister to visit Hammersmith and Fulham council, which has made significant savings despite facing substantial funding cuts under the Tories.

    Minister reply

    Expresses willingness to visit Hammersmith and Fulham council.

  • Steve Darling LD Torbay

    Question

    Welcomes Torbay council's achievement of a 'good' rating from CQC but raises concerns about funding losses for adult social care.

    Minister reply

    Acknowledges the issue and offers to discuss specific figures with the MP.

  • Rachel Hopkins Lab Luton South and South Bedfordshire

    Question

    Welcomes the link between local government funding and deprivation, asking how it will benefit children in Luton.

    Minister reply

    Commits to significant investment in Luton to support its economic growth and ensure children thrive.

  • Blake Stephenson Con Mid Bedfordshire

    Question

    Questions the Minister's confidence that rural deprivation will be adequately addressed.

    Minister reply

    Confirms commitment to addressing rural deprivation through improved data analysis and meeting with local leaders.

  • Mike Kane Lab Wythenshawe and Sale East

    Question

    Asks for a commitment to work on anomalies in Trafford council's funding formula.

    Minister reply

    Commits to working closely with colleagues, including those in Trafford.

  • Martin Wrigley LD Newton Abbot

    Question

    Raises concern about Teignbridge receiving a negative change in this year’s settlement while Devon sees an increase.

    Minister reply

    Acknowledges the issue and offers to work with colleagues to ensure services are improved.

  • Jonathan Brash Lab Hartlepool

    Question

    Criticises the Conservative government's budget cuts in Hartlepool, urging recognition of their impact.

    Minister reply

    Agrees with criticism and commits to working closely with colleagues in Hartlepool.

  • Sarah Olney LD Richmond Park

    Question

    Raises concern over the fair funding formula's potential negative impact on London councils and those living in poverty.

    Minister reply

    Acknowledges concerns and commits to working with local authorities on raising income and ensuring financial sustainability.

  • Clive Jones LD Wokingham

    Question

    Asked if the Government has protected tier 1 local authorities from real-term cuts, honoured their commitment to a new fair funding formula by removing the recovery grant, and how they expect local authorities to afford dedicated schools grant deficits accrued up to 31 March 2028.

    Minister reply

    The Minister referred Clive Jones to her earlier answers.

  • Emily Darlington Lab Milton Keynes Central

    Question

    Welcomed the settlement and asked if she would meet them to talk about encouraging councils to build homes at the same rate as Milton Keynes.

    Minister reply

    The Minister agreed to meet Emily Darlington to discuss fast-growing cities and building homes.

  • Sarah Dyke LD Glastonbury and Somerton

    Question

    Asked if she accepted additional cost pressures are linked to geography and sparsity, and what steps were being taken to support large rural councils such as Somerset.

    Minister reply

    The Minister confirmed she recognised the issue and outlined steps being taken to address it.

  • Pam Cox Lab Colchester

    Question

    Asked for a timeline on funding that will do much to improve local services for local residents in Colchester.

    Minister reply

    The Minister stated the Government would release information to councils today so they can start budgeting and engage heavily with local authorities over months.

  • Tom Morrison LD Cheadle

    Question

    Asked why Stockport council missed out on the recovery grant and whether it opens up legal challenges.

    Minister reply

    The Minister expressed confidence in details being published today and stated they will be working with local authorities to set budgets.

  • Mohammad Yasin Lab Bedford

    Question

    Asked if the Government would invest additional funding to support growth due to planning permission for Universal Studios theme park.

    Minister reply

    The Minister agreed that it was a landmark moment and hoped today’s settlement would help them on this journey.

  • Helen Morgan LD North Shropshire

    Question

    Asked if she would provide exceptional financial support to get through the difficult period, work with MPs to ensure Shropshire council is put on a secure financial footing for the future.

    Minister reply

    The Minister thanked Helen Morgan and stated they will take decisions about financial support in the usual way.

  • Rosie Wrighting Lab Kettering

    Question

    Asked if the Minister confirmed this is a Labour Government sending the message that Kettering deserves its fair share.

    Minister reply

    The Minister praised Rosie Wrighting’s efforts and stated they were doing their best to meet the needs of Kettering.

  • Vikki Slade LD Mid Dorset and North Poole

    Question

    Asked if she would commit herself to working with the Department for Education to introduce a cap on charges and profits for specialist schools.

    Minister reply

    The Minister agreed to work with colleagues in the Department for Education and offered to investigate specific cases.

  • Naushabah Khan Lab Gillingham and Rainham

    Question

    Asked what changes mean for her local area, whether she would come to Medway to meet them and discuss how they can take on some of those other issues.

    Minister reply

    The Minister stated she was happy to visit the constituency and see for herself what could be done.

  • Andrew George LD St Ives

    Question

    Asked if she would meet them, along with other local Members, to discuss issues regarding bespoke arrangements for the Council of Isles of Scilly.

    Minister reply

    The Minister agreed to meet.

  • Andrew Pakes Lab Peterborough

    Question

    The Conservatives blame councils for being poor despite overseeing 14 years of austerity and underfunding. Peterborough city council will receive £65 million more by 2028-29, which is a life-changer for many people. How can this money be used to transform communities?

    Minister reply

    Thanking Andrew Pakes for his consistent championing of Peterborough and visiting the area multiple times, Alison McGovern expressed confidence in the investment being made in Peterborough to help it thrive.

  • Caroline Voaden LD South Devon

    Question

    The multi-year settlement did not refer to pressures facing rural areas. Issues like SEND, care, bus services, and bin collections are more expensive due to the longer road network in Devon. Using deprivation as a funding formula does not account for older populations or hidden pockets of deep deprivation. Will hidden pockets of deprivation be recognised?

    Minister reply

    Acknowledging previous answers on rural areas, Alison McGovern reassured Caroline Voaden about the quality and accuracy of the latest indices of deprivation.

  • John Slinger Lab Rugby

    Question

    Welcoming the settlement that puts fairness at the heart of local government funding, John thanked the Minister for increased funding for Warwickshire. He noted there is not a single Reform UK MP in the Chamber and asked if this indicates Reform does not take local government seriously.

    Minister reply

    Alison McGovern agreed and pointed out that their first duty as MPs is to listen to constituents and be present in the House.

  • Lisa Smart LD Hazel Grove

    Question

    Welcoming the multi-year funding settlement, Lisa mentioned Stockport's concerns about being worse off despite having one of the most deprived parts of Greater Manchester. They missed out on a recovery grant by 0.01%. Will the Minister meet to work out how to ensure vulnerable constituents are not unduly impacted?

    Minister reply

    Alison McGovern confirmed she will meet Lisa Smart, Navendu Mishra and Mr Morrison to discuss this.

  • Steve Race Lab Exeter

    Question

    Welcoming the multi-year settlement, Steve thanked Alison for engagement on local areas. Devon county council is set to get a significant uplift in funding over years. Will this increase in funding have a positive impact on services and local people?

    Minister reply

    Alison McGovern highlighted consequences of council cuts in parks and town centres and committed to working with Steve Race to improve services for Gravesham residents.

  • Peter Swallow Lab Bracknell

    Question

    Between 2015-2020, the Conservative Government cut Bracknell Forest council’s funding by £500,000. This settlement sees a rise of almost £10 million—an increase of over 7%. Does my hon. Friend agree that this shows Labour will invest in local services while Conservatives choose austerity?

    Minister reply

    Alison McGovern thanked Peter Swallow for standing up for constituents and ensuring they get needed services.

  • Natasha Irons Lab Croydon East

    Question

    Welcoming the Government’s taking into account deprivation in funding, Natasha highlighted investment in poorest communities. Croydon is set to receive an extra £158 million over this Parliament. What is the timetable for getting this extra investment?

    Minister reply

    Alison McGovern thanked Natasha Irons for her work and committed to working with local authorities to set budgets in spring.

  • Elsie Blundell Lab Heywood and Middleton North

    Question

    Welcoming the additional investment, Mrs. Blundell raised concerns about firefighters attending flooding and water-rescue incidents up 40% over the last decade. Has any consideration been given to introducing a statutory duty on local fire and rescue services?

    Minister reply

    Alison McGovern thanked Elsie Blundell for raising climate change effects, assuring her that the Fire Minister will address this.

  • Daniel Francis Lab Bexleyheath and Crayford

    Question

    Five years ago, Bexley council sought a capitalisation order due to dire funding situation. Will Alison McGovern contrast today's announcement with the previous Government’s approach?

    Minister reply

    Alison McGovern thanked Daniel Francis for championing constituents and highlighted the chaotic situation under austerity versus the current long-term multi-year settlement.

  • James Naish Lab Rushcliffe

    Question

    Nottinghamshire county council received a £234 million increase over this Parliament, or 30%, making a huge difference. What decisions have been taken on avoiding cliff edges due to loss of new homes bonus and similar mechanisms?

    Minister reply

    Alison McGovern expressed willingness to meet Nottinghamshire MPs in the new year to discuss rurality and other issues.

  • Antonia Bance Lab Tipton and Wednesbury

    Question

    Black Country people are proud and resilient, but 50 years of deindustrialisation and 14 years of Tory austerity have left my borough of Sandwell the fifth most deprived in the country. Does the Minister agree with me that this Government can finally see deprived urban areas—post-industrial areas like mine—and is finally giving us back what we are due?

    Minister reply

    I very much agree. For those places that bore the costs of bad decisions many years ago and have never been able to get fully back on their feet, this is part of turning the corner.

  • Anna Dixon Lab Shipley

    Question

    Does the Minister agree that, with elections in May next year, if residents in my Shipley constituency want to see improvements in local services, they will need a Labour council working with a Labour Government?

    Minister reply

    My announcement today is a massive vote of confidence in the people of Shipley and of Bradford. I look forward to working with my hon. Friend to make sure that every penny piece of that investment improves her constituents’ lives.

Shadow Comment

David Simmonds

The shadow Minister criticised the settlement for assuming higher taxes everywhere, reducing resources at a local level, punishing efficiency, introducing new hospitality taxes, and implementing a homes tax that costs the Treasury money. He argued that rising business rates are crippling businesses, increasing pressure on communities. The response highlighted how councils would be left £1.5 billion worse off due to national insurance contributions alone.

▸ Assessment & feedback
Summary accuracy