Documents to download

The debate

The debate topic was proposed by Florence Eshalomi, chair of the Commons Housing, Communities and Local Government Committee.

At the end of further Estimates debates on Wednesday 25 June, the House will vote on whether to approve the Main Estimate for MHCLG for 2025/26.

The Estimate

Day-to-day spending (Resource DEL)

MHCLG categorises its day-to-day expenditure into funding for local government, and funding for housing and communities.

Local government

MHCLG proposes a local government Resource DEL (day-to-day spending) budget of £13,849.0 million, a £2,493 million (+22.0%) increase from the budget for 2024/25 of £11,356.0 million. The main drivers of this increase include the following:

  • An increase of £2,380.4 million in respect of significant increases for several local government Resource DEL grants. This includes additions of £857.0 million for Adult Social Care, a transfer of £684.0 million from the Department for Education for Children’s Social Care, and an additional £515.0 million to support the increased costs of Employers’ National Insurance Contributions.
  • There is also a net increase of £362.0 million in respect of other local government settlement grants. This is comprised of an additional £823.0 million for the Revenue Support Grant, Recovery Grant, and Funding Floor; but offset by a reduction of £461.0 million for the Services Grant, Funding Guarantee, and Rural Services Delivery Grant (which are not being paid in 2025-26).

Housing and communities

MHCLG proposes a housing and communities Resource DEL (day-to-day spending) budget of £4,629.2 million, a £272.2 million increase (+6.0%) from £4,357.0 million. The main drivers of this increase are:   

  • A new budget of £531.0 million for Integrated Settlements for Established Mayoral Strategic Authorities, funded partly from internal budget reallocations, and partly from budget transfers received from several other government departments (see Integrated Settlements section, below);
  • An uplift to budgets linked to the department’s priorities on homelessness, specifically £267.0 million for the Rough Sleeping Prevention and Recovery Grant (replacing the £204.0 million from the previous Rough Sleeping Initiative grant), and £194.0 million of funding on the Homelessness Prevention grant;and
  • Increases to Housing & Planning budgets, such as £45.0 million to support work on building remediation, an increase of £44.0 million to fund the Private Rented Sector White Paper, and £30.0 million of additional funding to deliver legal duties under the Domestic Abuse Act 2021.

This is offset by reductions of:  

  • £407.7 million in respect of the UK Shared Prosperity Fund, in line with the Autumn Budget 2024 announcement that the UKSPF would be extended for a further year at a reduced level;
  • £316.8 million in respect of Elections, reflecting that no General Election is planned in 2025/26;and
  • £32.8 million in respect of MHCLG Staff, Building and Infrastructure Costs, largely driven by a £25 million transfer out of Local Government RDEL budgets to support local authorities in modernising service provision through IT.

Investment spending (Capital DEL)

MHCLG proposes a Capital DEL (investment spending) budget of £9,054.7 million, a £610.2 million increase (+7.2%) from £8,444.5 million. The main drivers of this increase are: 

  • £1,033.8 million increase in respect of Housing and Planning, specifically budget increases for building remediation (£553.0 million), the Affordable Homes Programme (£399.0 million), and the Local Authority Housing Fund (£100.0 million); and
  • £483.1 million increase due to the new funding established for Integrated Settlements, funded partly from internal budget reallocations, and partly from budget transfers received from several other government departments.

This is partially offset by:  

  • A reduction of £830.2 million in respect of the Local Growth & Devolution budget subheading, significantly driven by budget reductions for the UK Shared Prosperity Fund (£183.0 million), English Devolution deals (£66.0 million), Place Based growth funding (£57.0 million), and the Levelling Up Fund (£101.0 million);
  • Additional reductions within the £830.2 million include programmes in their final stages, such as Levelling Up Partnerships (£149.0 million), the Towns Deals fund (£131.0 million), and Future High Streets Funding (£79.0 million);and
  • A reduction of £118.0 million due to the end of the Single Homelessness Accommodation Programme.

New Integrated Settlements budgetary subheading

The cumulative £969.0 million in respect of the new funding established for Integrated Settlements is mainly derived from transfers in from a number of other government departments, including: Department for Education (£260.0 million), Department for Transport (£354.0 million), Department for Energy Security and Net Zero, (£67.0 million) and Department for Culture, Media and Sport, Department for Business and Trade, and Department for Work and Pensions (£15.0 million). The remainder has been reallocated from existing MHCLG budgets such as Housing and Planning (£52.0 million) and Local Growth and Devolution (£221.0 million). 

Demand-led spending (Annually Managed Expenditure)

MHCLG has proposed a Resource AME (demand-led day-to-day spending) budget of £24,367.3 million, a £27.0 million increase (+0.1%) from £24,340.3 million. The main drivers of this increase are: 

  • £255.4 million in respect of business rates retention;and
  • £200.0 million to provide budget cover for business rates outturn adjustments.

This is partially offset by a reduction of £421.6 million in respect of local authority forecasts for business rates relief grants for 2025/26. 

The MHCLG Capital AME budget remains unchanged at £0.0 million.

Policy background

The full debate pack, available to download as a PDF using the buttons above and below this summary, provides policy and funding background, and a selection of commentary, on:

  • Housing
  • Integrated Settlements for Mayoral Strategic Authorities
  • Local authority core spending power
  • Social care
  • Homelessness and rough sleeping

Documents to download

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