Local government finances

Local government in England is handled by several different types of local authority – in some areas it is split into two tiers (of district and county councils), while in others a single authority handles all local government responsibilities. The needs and relative deprivation of these areas vary widely, and so does the amount of money available to each.

Metropolitan districts receive more settlement funding per person from central Government than any other type of local authority, while shire counties and the districts within them receive the least. These variations are considerably reduced when one instead looks at the local authorities’ core spending power, which takes into account the differing amounts of money that each authority can raise on its own behalf.

_{Source: DLUHC, Final local government finance settlement: England, 2022 to 2023, 7 February 2022; per-person figures calculated using data from ONS, Population projections – local authority based by single year of age, via Nomis; real-terms figures calculated by smoothing the OBR’s GDP deflator growth forecast across the years from 2019/20 to 2021/22 to remove the distortions caused by pandemic-related factors.}

On average in England, settlement funding has decreased in real terms since 2015/16 across all types of local authority, and has been largely flat since 2019/20. Spending power has decreased less on average, and following 2020/21 it has begun to slowly increase, but there is much more variation in spending power between individual authorities than for settlement funding.

The amounts spent per person by each local authority area show broadly similar variations to those in funding – London boroughs spend the most per person, and shire counties and districts the least. There is a large range of spending between different local authority areas, with the highest spending typically to be found in London. 

Spending per person decreased in real terms in almost all local authority areas (combining counties and districts) between 2015/16 and 2019/20, although spending did then increase in 2020/21 during the Covid-19 pandemic.

Local authorities mostly spend their resources on education services and adult and children’s social care – these three areas together made up well over half of local government spending in 2020/21, much of it as part of ring-fenced grants.

Similar statistics are also available for the devolved administrations of the UK, but are not covered in depth in this briefing.