Final local government finance settlement: England, 2025 to 2026
This collection brings together all documents relating to the final local government finance settlement for England in 2025 to 2026.
The local government finance settlement is the annual determination of funding to local government. It needs to be approved by the House of Commons.
This collection covers the final local government finance settlement for 2025 to 2026.
The provisional local government finance settlement 2025 to 2026 was published on 18 December 2024.
Introduction
This section contains the press release for the final settlement 2025 to 2026 and the written ministerial statement made in Parliament by the Rt Hon Angela Rayner MP on 3 February 2025.
2025-26 Government Income Guarantee for the Extended Producer Responsibility for Packaging (pEPR) Scheme
Beyond the settlement, the extra funding announced at the Autumn Budget includes a guarantee that local authorities in England will receive at least £1.1 billion in total in 2025-26 from the new Extended Producer Responsibility for packaging (pEPR) scheme, with each local authority guaranteed at least the level of income indicated in November’s provisional local payment figures.
The government will guarantee that if local authorities in England do not receive Extended Producer Responsibility income in line with their November 2024 payment estimates in the first year of the scheme (2025-26), they will provide an in-year top up. If an in-year top up is required for local government, the Ministry of Housing, Communities and Local Government expects to make top up payments to local authorities in England through unringfenced section 31 grants in March 2026.
Grants paid to local authorities in relation to the government’s guarantee of pEPR funding will be payments based on figures collected from the Scheme Administrator. If an in-year top up is required, the Ministry of Housing, Communities and Local Government expects to conduct a reconciliation process in the usual way. More details on this process will be set out when any payments are made.
Provisional settlement 2025 to 2026 consultation results
This section contains the summary of responses to the provisional local government finance settlement consultation.
Final settlement 2025 to 2026: supporting documents
This section contains useful information for understanding the final local government finance settlement for 2025 to 2026, including:
- the local government finance report 2025 to 2026
- a key information table for local authorities regarding core settlement allocations
Council tax report 2025 to 2026
This section contains the council tax referendum principles report that has been laid before the House of Commons:
- the Referendums Relating to Council Tax Increases (Principles) Report 2025 to 2026
Core Spending Power of local authorities 2025 to 2026
Core spending power is a measure of the resources available to local authorities to fund service delivery. It sets out the funding made available to local authorities through the local government finance settlement. This section has:
- an explanatory note, which sets out the methodology used to calculate core spending power
- an information table, which shows for each local authority: the change in core spending power since last year; core spending power per dwelling; and the component figures which are included in core spending power (council tax, locally retained business rates and relevant government grants)
To note, Core Spending Power figures set out local authorities’ position under 50% business rates retention arrangements, which is the position that applies to most local authorities. Core Spending Power figures have not been amended to reflect authorities with bespoke ‘increased’ business rates retention arrangements (i.e. above 50% retention arrangements).
Business rates retention 2025 to 2026
This section contains useful information for understanding the business rates retention system for 2025 to 2026, including:
- a key information table for business rates pools
- an explanatory note for authorities with increased business rates retention arrangements
- a supplementary table setting out all local authorities’ 50% business rates retention position, for calculation purposes
- an information table setting out the distribution of levy surplus in 2024 to 2025 and the allocations of this
Final settlement 2025 to 2026: social care funding
The final local government finance settlement for 2025 to 2026 makes available up to £3.7 billion in additional funding for social care authorities. This section contains:
- an information table which sets out allocations of Social Care Grant funding as part of the settlement
- an information table which sets out the composite grants that have been consolidated as part of the Children and Families Grant. This will not form part of Core Spending Power in 2025 to 2026
- an explanatory note on the methodology underpinning the Children’s Social Care Prevention Grant for 2025 to 2026. This has been updated since the provisional settlement to reflect the uplift to the grant
- a note on the methodology underpinning the 2024 Children’s Services Area Cost Adjustment which has been applied to the Children’s Social Care Prevention Grant
- a table providing the local authority values of the 2024 Children’s Services Area Cost Adjustment
Information about social care charging arrangements and allowances for 2025-26 has been published alongside the final settlement to support authorities in their financial planning.
Grant determinations 2025 to 2026
This section contains draft grant determinations for 2025 to 2026 for:
- Children’s Social Care Prevention Grant
- Children and Families Grant
Draft grant determinations for the Social Care Grant and the Local Authority Better Care Grant will be published shortly.
This section will be further updated in due course with final grant determinations; we will publish grant determinations for the remaining section 31 grants that will be distributed as part of the final local government finance settlement 2025 to 2026, including grant conditions for the Market Sustainability and Improvement Fund.
Final settlement 2025 to 2026: New Homes Bonus allocations
The New Homes Bonus is a grant paid by central government to local councils to reflect housing growth in their areas. This section has:
- an information table which sets out New Homes Bonus allocations as part of the settlement
This section will be updated with a calculator which sets out how New Homes Bonus allocations have been determined for each local authority shortly.
Final settlement 2025 to 2026: further methodology notes
The final local government finance settlement for 2025 to 2026 will implement a one-off Recovery Grant and distribute £515 million for local authorities, in compensation of National Insurance Contributions, as announced at the provisional settlement. This section includes methodology notes on the following:
- a technical note on the methodology underpinning the Recovery Grant for 2025 to 2026
- an updated explanatory note on how the Employer National Insurance Contribution Grant has been allocated at the final settlement