IfG analyses government’s increased investment in deprived councils

Article summary

The Institute for Government (IfG) has published an analysis of the government's December 2024 local government finance settlement, which allocates more funding to deprived areas. The analysis indicates a 3.5% real-terms increase in core spending power for 2025/26, with the most deprived councils receiving increases of up to 6.4%, compared to 3% for the least deprived. This is largely due to a new £600m 'Recovery grant'. However, the IfG notes that this single year's allocation cannot fully rectify over a decade of funding disparities, emphasising that it will take years to completely rebalance local authority finances. The most deprived councils have experienced a 20.1% real-terms funding cut from 2010/11 to 2024/25, which will only marginally improve to 15.3% by 2025/26 under the new settlement. While the settlement is seen as a positive step, the IfG highlights that rising costs, such as increases in National Insurance contributions and the National Living Wage, may counteract these...