IFS responds to provisional Local Government Finance Settlement

Kate Ogden, Senior Research Economist at the Institute for Fiscal Studies, said:

"Councils' general-purpose funding will increase by £3.9 billion (6.5%) next year, roughly in line with what could have been expected given tentative plans first set out this time last year. But – like other public services – councils have not been compensated for much-higher-than-expected inflation over the intervening period. The result is that, once you take account of this higher-than-expected inflation, councils will in real terms receive around 3% less in 2024–25 than they might have expected a year ago.

"This is still a more generous cash increase than most public services will see, but it comes in the context of big cost pressures for councils, not least a 10% planned increase in the National Living Wage next April. And based on spending totals pencilled in at the Autumn Statement last month, 2025–26 and beyond looks to be even tougher for councils."