Local Government Finance Settlement 2022/23

The provisional 2022/23 Local Government Finance Settlement was published on 17 December 2021, with the final version following on 7 February 2022. It includes about £16.3 billion in settlement funding for local councils in England, a 1.8% decrease on the previous year when adjusted for inflation.

With other grants and an estimate of council tax included, the core spending power of councils in England will rise to £54.1 billion in 2022/23, a real-terms increase of 4.6% compared to the previous year.

The final settlement was debated and approved in the House of Commons on Wednesday 9 February.

Changes in local government funding have affected different classes of local authority in different ways. As of this Settlement, shire counties, metropolitan districts and unitary authorities will have real-terms core spending power higher on average than it was in 2015/16. Settlement funding levels, however, remain about 30-50% below their 2015/16 levels for all classes of authority.

This year’s settlement partly reverses the trend for council tax to make up an increasingly large proportion of local councils’ spending power. The proportion funded by the settlement funding assessment continued to decrease, but this was offset by increases in grants for local services and social care.

For several years, the Government has been suggesting that it will reform the system of distributing funding to local authorities in order to make it fairer – it is currently based on an assessment from 2012/13. A consultation on changing the system is expected in the early months of 2022.

The most recent Spending Review allocated large increases for local government, and core spending power is expected to increase by at least 2% in real terms every year until 2024/25. The current Settlement covers only one year, but there have been calls for settlements covering multiple years for some time.