‘After years of cuts, Labour’s local government settlement begins to put things right’

After more than a decade in which austerity hollowed out local government, the final Local Government Finance Settlement marks a turning point for councils across the North and Midlands.

For communities that bore the brunt of the cuts, this settlement is not just a technical adjustment to funding formulas, but a political statement about where this government’s priorities lie. Labour in government is serious about fairness, addressing need, and backing the places that keep the country running.

At the heart of the settlement is the delivery of two long-standing Labour asks: funding based on deprivation, and full recognition of councils’ ability to raise revenue locally when allocating grant funding. For years, authorities in poorer parts of the country were expected to deliver the same services with a far weaker tax base. The move to 100 per cent council tax equalisation finally corrects that imbalance, creating a system that recognises structural disadvantage rather than entrenching it.

Equally significant is the government’s decision to retain and uplift the Recovery Grant. Following strong lobbying from my colleagues in Parliament alongside our friends in local government, the final settlement includes a £440 million increase in the Recovery Grant, with 81 percent of that funding—£358 million—going to SIGOMA authorities, the majority of which in the North and Midlands. This is targeted investment where it is needed most, and a clear rejection of the one size fits all approach that defined the austerity years.

Councils such as Sandwell, Sunderland and Wirral will see three‑year Recovery Grant increases of £27.4 million, £23.9 million and £22.7 million respectively, giving them real headroom to stabilise services and plan for the future. Places like my constituency in Doncaster, as well as Barnsley and Stoke‑on‑Trent—too often at the sharp end of cuts — will each receive £10 million in additional Recovery Grant funding over the period, strengthening their ability to protect frontline services.

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Crucially, the settlement also delivers fairness in year‑to‑year funding. The Recovery Grant Guarantee ensures that the most deprived councils see a minimum 5 per cent funding increase in 2026/27, providing stability after years of uncertainty. As a result of these changes, more investment is finally going back into those communities that need it most.

Core Spending Power figures underline the scale of the shift. Birmingham, Bradford, Manchester and Derby will all see double‑digit increases, far above the national average of 6.1 per cent, while many other northern and midlands authorities are also comfortably above average. This is what delivery looks like when it is rooted in redistribution, not rhetoric.

There is more to do. We will continue to argue for a system that fully reflects need and avoids future funding cliffs, creating a fairer, more sustainable system of local government finance for the long term. But this settlement matters. It shows that when Labour listens to local government and puts fairness at the centre of decision‑making, it is councils—and the communities they serve—that benefit most.

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