Provisional Local Government Finance Settlement 2026/27: CCN responds

Today the government has unveiled its provisional Local Government Finance Settlement for 2026/27.

The settlement sets out allocations for local authorities across England for the next three years, and incorporates an updated distribution of resources following the conclusion of the Fair Funding Review 2.0.

As a consequence of the review, some County Councils Network (CCN) councils will receive an increase in government grant funding but others will see a reduction. For the network's members in totality, much of county and unitary councils' increase in 'core spending power' outlined today will be derived from maximum council tax increases.

The settlement will now go out to consultation ahead of it being finalised in early 2026.

Below, the CCN responds to today's publication of the provisional settlement.

Cllr Steven Broadbent, Finance Spokesperson for the County Councils Network, said:

“The County Councils Network (CCN) has long-argued that the funding system for councils is out-of-date and in desperate need of reform. The network has engaged positively with the government as they have developed their proposals.

“The CCN recognises that the Fair Funding Review 2.0 will result in vastly different outcomes for our county and unitary authorities, and today’s provisional settlement reveals that some areas will see a welcome increase in government funding over the next three years. However, many of our councils will see their government grant cut and the simple fact remains that county taxpayers, the length and breadth of this country, will foot the bill for these reforms. At least 90% of CCN member councils’ much-vaunted increase in total ‘core spending power’ will come from presumed council tax rises of 5%, we estimate.

“It is abundantly clear that recent changes to the original government proposals have disproportionately benefitted London and metropolitan boroughs at the expense of all county and rural areas. The continuation of the Recovery Grant and the removal of ‘remoteness’ from almost the whole funding formula will mean hundreds of millions of more funding will be diverted from rural to urban areas over the next three years. These last-minute changes, implemented against the available evidence, raises serious questions over whether ministers are unfairly cherry picking which councils benefit from extra funding.

“Overall, the three-year settlement outlined today will be extremely challenging and will leave many of member councils facing a substantial funding shortfall over the course of this parliament. It is simply unrealistic to expect them to provide vital care services while receiving deep reductions in government grant and more councils may now have to apply for exceptional financial support.

“The CCN will analyse this settlement in full and set out its consultation response but it is vital that the government makes more money available to mitigate the impact of the most recent - and unfair - changes to their proposals and ensure all councils have the resources they need to prevent severe cuts to services.”

The settlement also provided some further details on how government intends to manage councils' SEND deficits. In today's settlement the government said: 'Whilst we do not expect local authorities to plan on the basis of having to meet deficits in full, any future support will not be unlimited.'

Ministers said that further plans on SEND deficits will be set out in the final settlement, expected in early 2026.

Below, the CCN responds to the SEND update in today's settlement:

Cllr Bill Revans, SEND spokesperson for the County Councils Network, said:

“Today’s provisional Local Government Finance Settlement passes without a definitive answer on how government intends to manage SEND deficits, which is disappointing. Legislative changes have led to the explosion in demand over the last decade and to the present crisis, with local authorities working within nationally set legal parameters. Therefore, any solution to these deficits must be from national, not local government – especially considering today’s Fair Funding Review 2.0 distributes scant resources away from county areas.

“Counties have borne the brunt of this dramatic increase in demand and are set to account for more than half of the country’s total SEND deficit in March 2028, once the statutory override is scheduled to expire. This is because they receive lower per-pupil funds compared to other parts of the country, so have had to spend more as demand rachets up. Councils have been prudent, taking tough and in many cases unpopular decisions in their SEND departments, but they have been swimming against the tide for a long time.”