Map: Council tax winners and losers after government reveals funding

Councils in England have learned how £78bn of investment will be shared among them as the government reveals its new multi-year funding settlement.

The plans have shifted funding towards more deprived areas, which the Ministry of Housing, Communities and Local Government (MHCLG) says is a bid to restore “pride and opportunity in left behind places”.

Several outer London boroughs like Luton, Enfield and Newham have received the biggest spending increases to 2028/29, followed by cities like Manchester, Birmingham, and Derby.

While most councils will see at least a small cash injection, there are 33 which will see their spending power drop. Taking the biggest reduction is Harborough, in Leicestershire, which will see reductions of 15.8 per cent over the next three years.

According to MHCLG, councils will see an increase of 23 per cent in their core spending power compared to 2024-25 by the end of the multi-year settlement.

Housing minister 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.”

The funding settlement sets out each local authority’s core finance allocation, which allows them to set local council tax bills for next April and finalise an overall budget.

How was the new funding decided?

This year’s settlement has used the new “fair funding” formula for the first time, giving higher weighting to councils with a higher deprivation score.

England’s most deprived areas were revealed in October in landmark statistics that are only released every five years. They named Jaywick, in Clacton-on-Sea, as the most deprived neighbourhood, followed by several in Blackpool, Middlesbrough, Birmingham and Hartlepool.

Will tax bills rise now?

Regardless of the funding allocation, most councils will likely still increase council tax bills by the maximum allowed amount (4.99 per cent for an upper-tier authority with social care responsibilities).

However, six councils have been granted the power by the government to make larger council tax hikes for two years without needing a residents’ referendum.

These are Kensington and Chelsea, Westminster, Wandsworth, Hammersmith and Fulham, City of London, and Windsor and Maidenhead. These are some of the biggest losers from the new funding allocation, but they also have historically low council tax bills.

How have councils reacted to the announcement?

Some have criticised the new funding model, arguing that it favours London and metropolitan areas over more rural locations. The County Councils Network accused ministers of “cherry picking” over the plans, “at the expense of all county and rural areas”.

Housing minister Steve Reed said: ‘This is a chance to turn the page on a decade of cuts’ (PA)

Some council leaders have also said that the government must go further in reforming key services, like special educational needs (Send), with little detail coming in the settlement on the issue. English upper-tier councils’ collective Send deficit is forecast to reach £14bn by 2028.

In the face of rising financial pressures, many councils are struggling to fulfil the legal duty to be financially stable, with an increasing amount signalling they will seek exceptional financial support (EFS) from the government to prevent effective bankruptcy.

There were 30 councils that received this support last year, with speculation that up to 100 may apply for the special measures in 2026.

Louise Gittins, chair of the Local Government Association, which represents councils, said: “It is good that government has acted on LGA calls to provide multi-year financial certainty to councils and a streamlined funding system.

“While funding levels have risen over the last few years, budget-setting will be another hugely challenging task for many councils again next year. An increase in overall funding remains needed to ensure the financial sustainability of councils and our local services.”

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