A previous article in Socialism Today, written after the first budget of the incoming Labour government, laid out the dire position facing local council services: “Since 2010-11, councils have made cuts to local services of a huge £24.5 billion. They spent 42% less on services in 2022-23 than if spending had kept pace with cost and demand pressures since 2010-11”.(No.283, December 2024-January 2025)
How has the position changed, after a further budget and another Local Government Funding Settlement? The original figures were based on research by the Local Government Association (LGA) and the Institute for Fiscal Studies (IFS) of council budgets up to 2022-23. However, over the past two years, the LGA projected a further funding gap of £6.2 billion. So, the cumulative, current ‘spending gap’ (the amount required to return to 2010 service standards) has now probably risen to over £30 billion.
On 17 December 2025, the Labour government announced provisional funding for English local councils for the next three years. This was made up of several elements collectively producing a Core Spending Power (CSP) for local authorities.
In the first year of the proposed three-year settlement, government figures show the total core spending power of English councils rising from £73.52 billion to £77.71 billion, a rise of £4.19 billion; surely good news, though still much less than the £30 billion lost?
But all is not what it seems. The announcement was about ‘spending power’, not government funding as such. Of that rise in spending power for 2026-27, £1.64 billion (39%) comes from the government and the majority, £2.55 billion (61%), from assumed increases in council tax levied on local people at the maximum increased rate (without a referendum) of 5%.
Over the full three-year period covered by the announcement, core spending power will rise from £73.52 billion in 2025-26 to £84.62 billion in 2028-29, but fully 75% of the rise (£8.34 billion) isn’t new government money, but increased taxes on local people through rises in council tax. In fact, the County Councils Network (CCN) estimated that at least 90% of CCN member councils’ much-vaunted increase in total ‘core spending power’ will come from presumed council tax rises of 5%.
The overall rise in spending power, moreover, isn’t all new money for new services; some of it will be eroded by inflation. Consumer inflation reached nearly 4% by the end of 2025, but inflation in local authority services, such as social care, was twice as high, further reducing the impact of increased funding. And statutory services, such as social care, now account for the majority of local government spending.
As the Institute for Local Government explained in October 2025: “Between 2009-10 and 2024-25, the proportion of local authority spending that went on adult and children’s social care rose from 53.0% to 68.5%”.
As a result of inadequate funding but continued legal responsibility for service provision of social care (delivered mainly through private contractors), local councils savagely cut spending on other, non-statutory, services: for example, neighbourhood services by 25% in real terms since 2009-10, libraries by 50%, and youth services by 60%.
These youth service cuts, for example, have real consequences. The biggest local government union Unison has raised that “the loss of so many facilities and the specialist workers who run them have put teenagers at risk of isolation, being swept into gang and knife culture, or taking part in anti-social activities on the streets”. So the repair and renewal of past cuts to essential, if non-statutory, services should be a priority.
Finally, December’s ‘new money’ is not government generosity – most of it is, in fact, reallocated from other local authorities. Under the so-called ‘Fair Funding Review 2.0’, £2.1 billion has been transferred to 161 councils by cutting the funding of 186 local councils, who will now be planning further cuts to balance their budgets.
The IFS estimates that “almost half of councils (43%) will see their funding fall in real terms over the next three years. This includes the majority of shire districts (70%) and inner London boroughs (67%)”. At the other end of the spectrum, “one in ten councils will see their funding increase in real terms by a sixth (16.7%) or more over the next three years”, although, as mentioned earlier, that increase is largely through increased taxes on local people.
So, a challenge needs to be mounted widely against the continued austerity squeeze on local councils.
At the founding conference of Your Party held in November last year it was recognised that “the 2026 local elections are a huge opportunity to stand Your Party candidates that can expose and cut across all the pro-austerity parties, not least Reform UK”.
Recognition, and preparation, however, are two different things. There was broad support for the proposal argued for at the conference by Socialist Party members to urge Your Party proto-branch supporters groups to “organise open public conferences, including representatives of trade unions, community organisations, socialist parties and others, to discuss their local community’s needs and draw up a no-cuts ‘Peoples Budget’ based on those needs, not Starmer’s continued austerity”. A number of those have been successfully held or are planned for the coming weeks.
By Your Party candidates pledging “to take these issues and more into the council chambers”, the proposal concluded – fighting “for a no-cuts budget that meets the needs of our communities and demanding the money to pay for it from central government” – the best possible election campaign could be prepared in those council areas going to the polls in May. But if it proves not possible for there to be a wide stand through Your Party in this year’s polls, other means of co-ordinating the biggest possible challenge will have to be found.
The 17 December provisional local government settlement goes nowhere towards resolving the shattered state of local government services after a decade and a half of austerity.
Socialist candidates should stand widely in the May council elections and loudly demand the restoration of the money stolen from local authorities over the past 16 years to provide jobs, homes and services for all. And together with local trade unions, be prepared to mobilise people to fight for that money to come from the central government, not stolen from other local authorities.
Dave Nellist