Local authority core spending power to increase by 3.1% under Spending Review plans

The funding boost equates to an average annual terms increase in overall local authority core spending power of 3.1% across the spending review period between 2024 and 2029, according to HM Treasury.

A spending review document published on Wednesday (11 June) said that the Government aims to ensure "that funding is targeted effectively at the places and services that need it most and allocated in a way that empowers local leaders to deliver against local priorities".

It added: "This includes committing to multi-year allocations and moving to a more up-to-date assessment of each council's needs and resources through the upcoming 2026‑27 Local Government Finance Settlement (LGFS)."

The spending review announced by the Chancellor of the Exchequer, Rachel Reeves, also commits to increase funding for social and affordable homes, children's social care reform and adult social care services.

On housing, the review pledged to provide the “biggest boost to social and affordable housing investment in a generation” by confirming an extra £39bn in spending over the next decade to build new affordable homes.

The spending review meanwhile announced plans to spend £555m over the spending review period on children's social care reform to help "more children stay with their families, ensuring families have timely support and fixing the broken care market". Earlier intervention in children’s social care will be promoted.

The Government will also provide £560 million between 2026-27 and 2029-30 to refurbish and expand children's homes and foster care placements, according to the Treasury's spending review document.

An increase of more than £4bn for adult social care by 2028‑29 compared with 2025-26 was also promised.

Elsewhere, the document detailed plans to introduce a new local growth fund, including a 10-year capital settlement from 2026‑27 to 2035‑36, "for specific mayoral city regions in the North and Midlands with the highest productivity catch-up and agglomeration potential".

In addition, it confirmed that the integrated settlement will be expanded to London from 2026‑27 and reconfirmed a commitment to implement new integrated settlements for the North East, West Yorkshire, South Yorkshire and Liverpool City Region from 2026‑27.

"These five MSAs will join Greater Manchester and the West Midlands, so that mayors representing nearly 40% of people in England will have local control over a single flexible pot for growth and public services priorities," it said.

Plans to end government funding for asylum hotels were also announced as part of the spending review.

The Government committed to a £200 million transformation fund "to help end the costly use of asylum hotels in this Parliament and accelerate transformation of the asylum system by clearing the backlog, boosting appeals capacity and continuing to return those with no right to be here".

The Treasury's document meanwhile confirmed that the Government is working on a Schools White Paper, which will include plans to reform the current Special Educational Needs and Disabilities (SEND) system. The Schools White Paper will be published in the Autumn, according to the Treasury.

Adam Carey

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