Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Accepted
Single-year finance settlements hinder local authority long-term planning; multi-year committed for 2026–27.
Conclusion
In recent years, government has provided single-year finance settlements, with stakeholders consistently calling for multi-year settlements to aid longer term planning and decision making. Written evidence from Cornwall Council highlighted how single year settlements compound the financial challenges it faces and makes longer-term financial planning almost impossible.23 Government has now committed to multi-year funding settlements in 2026–27, the first in a decade, with MHCLG stating they are a crucial way to achieve greater efficiency in local government.24
Government Response Summary
The government agrees to implement multi-year funding settlements by the end of 2025, detailing actions such as the Fair Funding Review 2.0 consultation, introducing the Local Government Outcomes Framework, and consolidating various grants into the Revenue Support Grant.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: by the end of 2025, as part of the upcoming multi-year Local Government Finance Settlement. 2.2 On 20 June 2025, the government published the Fair Funding Review 2.0 consultation which set out the approach to radically simplify local authority funding, to provide local authorities with more flexibility and certainty over a greater proportion of funding. This will be supported by the Local Government Outcomes Framework, which, as set out above, establishes 15 national outcomes that central government wants to work with local authorities to deliver with their more flexible funding. From April 2026, the Framework will be used to help facilitate better join-up across central government to support local delivery, based around a set of collective priorities for local government. To simplify local authority funding that is currently distributed outside of the Local Government Finance Settlement, the government intends to bring together grants from across departments into large ringfenced consolidated grants, delivered as part of the upcoming multi-year Settlement. At least four large, consolidated grants will bring together funding streams across government for Public Health; Children, Families and Youth; Crisis and Resilience; and Homelessness and Rough Sleeping. The government also intends to roll suitable grants into the Revenue Support Grant where appropriate. 2.3 The government also proposes to simplify existing Settlement grant funding, including for adult social care. The government is proposing to consolidate the Market Sustainability and Improvement Fund and Social Care Grant into the updated Settlement Funding Assessment next year. The LA Better Care Grant will remain a grant, to ensure continued joint working between health and social care. MHCLG and DHSC continue to work closely on funding arrangements and assurance for adult social care. 2.4 The upcoming multi-year Settlement will pave the way for further consolidation in future years. Cross-government work will continue to explore which grants can be consolidated into the Settlement, aiming to avoid the use of micro-grants and future proliferation of grants to local authorities.