- Labour Government unveils radical overhaul of local authority funding to deliver a fairer Britain
- City Councils in region to see an increase of up to 47% on current settlements, with up to 30% for County Councils, to deliver vital services
- Figures are in stark contrast to last multi-year settlement from Tories which left East Midlands councils behind
Councils across the East Midlands will receive a huge boost to fund vital local services after the Labour Government unveiled a radical overhaul of how local government is funded.
The funding injection is aimed at restoring pride and opportunity in left behind places, giving councils that need it most more resources to bring back libraries, youth services, clean streets, and community hubs.
The money is part of the first multi-year funding settlement in over a decade so councils have three years of financial certainty, allowing them to plan ahead rather than firefight year to year.
In total, by the end of this multi-year settlement, councils across the country will see an increase of over 23 per cent in their core spending power compared to 2024-25 to pay for services including bin collections, housing, and children’s services.
But some councils in the East Midlands that saw their funding decimated under 14 years of Conservative rule will receive even more.
For example, Derby City Council will received £129.5 million in additional funding by the end of this Parliament in 2028/29 – an increase of 47% on their current settlement. Compare that to the last multi-year settlement offered by the Tories between 2015/16 and 2019/20, where the council received an increase of £5.3m – just 3%. Derbyshire County Council will also see an extra £160.6 million in funding – a rise of 22%. Under the Tories, funding went up by just 7% or £31.9m.
Nottingham City Council will also see a huge increase of 40% over the Parliament, equating to an extra £154.5 million – under the Tories, they received an increase of just 1% – whilst Nottinghamshire County Council will get a 30% uplift of £234 million, compared to 7% under the Tories.
In Leicester, the city council will see a 37% rise in their funding – compared to just 2% under the Tories – with an extra £150.7 million, and Leicestershire County Council will see a 25% increase – or £144.8 million – compared to 10% under the Tories.
Instead of an 18% cut to their funding under the Tories, Lincoln City Council will instead receive a 19% boost of £3.4 million under the new model, and Lincolnshire County Council will see a 30% uplift – an extra £214.7 million – instead of just 9% under the Tories.
And whilst there is no straight comparison in Northamptonshire due to the Tories presiding over the then-County Council effectively going bankrupt and being split in two, both West and North Northamptonshire Councils will receive a 21% increase to their current funding, equating to an extra £89 million in the West and £79.3 million in the North.
This marks a turning point for the way local government is funded away from the outdated system that saw some councils build up savings while others faced financial collapse. Instead, places are now being funded using an evidence-based system that properly recognises local circumstances and the true costs of providing services in deprived communities.
All councils will be protected financially during this change, with the change to new funding amounts being phased in gradually to keep services running smoothly for residents.
Secretary of State Steve Reed said: “This is a chance to turn the page on a decade of cuts, and for local leaders to invest in getting back what has been lost – to bring back libraries, youth services, clean streets, and community hubs.
“Today we’re making sure every community has the funding they need to succeed.”
Minister of State for Local Government and Homelessness, Alison McGovern said: “Deprivation doesn’t happen by accident – it’s the result of years of broken systems and wrong priorities. This settlement tackles that head-on by directing funding where it’s needed most.
“By fixing the link between funding and deprivation, we’re giving local areas the tools to create opportunities, support families, and rebuild the services that hold communities together. This is how we deliver a fairer Britain where everyone has the chance to succeed.”
The £600 million Recovery Grant introduced last year will continue throughout the three-year settlement, targeted at areas hit hardest by years of underfunding.
A new Recovery Grant Guarantee will also protect upper tier councils receiving this money, giving them above-inflation increases while they adapt to the fairer funding system.
Council tax
The government will continue supporting councils as they move to the new, fairer funding system.
All councils must still manage their budgets responsibly, and council tax rises will be capped at 3 per cent per year with an extra 2 per cent allowed for adult social care. It will be entirely up to local leaders to raise council tax.
In exceptional cases, councils can apply to raise taxes above this limit – but only if their residents don’t already pay more than average.
Six councils with historically very low bills will be given flexibility for 2 years with local leaders given the choice to use the flexibility: Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea, and Windsor and Maidenhead.
Around 500,000 households in these areas already have very low bills, with Band D households paying between £450 and £1,280 less in council tax than the average English household.
This temporary measure gives them the option of bringing their bills more in line with the rest of the country – making the system fairer.
Social care
The government is building a National Care Service so people get better quality care, more choice and control over their support.
And ministers have confirmed around £4.6 billion extra is made available for adult social care by 2028-29 to help make this happen – including £500 million to improve care workers’ pay.
The government is also rolling out the biggest transformation of children’s social care in a generation – backed by a historic £2.4 billion investment over the multi-year settlement.
The settlement also includes other major changes to make the system work better for councils and residents, including:
- Fairer housing incentives: letting councils keep all additional council tax from new homes to encourage local growth and home ownership.
- Simplifying the system: cutting red tape by streamlining 36 funding streams worth more than £56 billion over three years and freeing up councils to focus on residents’ priorities
