Three-Year English Council Funding Settlement Announced with Varied Impact Across Authorities
On 17 December 2025, a three-year English council funding settlement was announced, enabling councils to set their council tax rates next April and finalise their budgets. The funding will be allocated using a new Fair Funding formula that weights allocations toward authorities with higher deprivation scores, based on indicators such as income, employment, health, housing costs, and crime.
Winners in the new formula include Middlesbrough, Manchester, and Birmingham, as well as outer London boroughs Haringey and Newham. Conversely, wealthier areas like Kensington and Chelsea and Surrey are among the losers, losing a relative share of funding. While some areas see the new formula as fairer, northern authorities argue it does not fully compensate for past cuts, and rural councils feel discriminated against.
Most councils are expected to raise council tax in April, with upper-tier authorities with social care duties allowed increases up to 4.99%. Windsor and Maidenhead may raise taxes above this limit to align with the England average. Despite the settlement, many councils continue to face rising demand for social care and homelessness services, implying ongoing financial pressure and the potential for further cuts. Speculation suggests that up to 100 councils may seek Exceptional Financial Support to cover their day-to-day costs; last year, 30 councils received such support.
