The Chancellor delivered the Budget in late November, with several proposals impacting on councils and their communities.
In the LGA’s headline response, we said public attention will focus on decisions around national taxation and the cost of living, but that communities also care deeply about the local services they rely on every day.
We made clear that councils work tirelessly to deliver on the ambitions of residents and are key to solving many of the challenges the Government is looking to address.
However, the sector’s finances remain under severe strain, with councils facing huge cost pressures in areas including adult social care, temporary accommodation, special educational needs and disabilities (SEND), and home-to-school transport.
The Government has responded to LGA calls for greater financial certainty and a simpler funding system.
Funding has risen in recent years, but we are anxious that the Budget does not provide the level of funding councils urgently need to ensure their financial sustainability, protect services and support local communities.
There were several significant policy decisions in the Budget, including on bringing SEND spending into government from 2028/29, social rent convergence, and future asylum accommodation changes.
However, these will be subject to further consultation or future announcements, and the LGA will respond on behalf of its members to each one. Councils require early clarity so they can plan services and budgets effectively.
New initiatives across health integration, planning, economic crime, digital transformation and employment support will depend on close collaboration with local government. Ensuring councils have a clear role within design and delivery will be critical to achieving intended outcomes.
New flexibilities and funding for mayoral authorities, such as integrated settlements, business rates retention zones and growth funds, represent important steps forward.
However, regions outside of devolution areas risk falling behind unless there is a clear pathway to gaining access to the opportunities that genuine devolution can provide.
The Budget’s new growth measures offer opportunities to support local economic development.
Councils act as both democratic leaders and practical enablers of local growth. Their close connection to communities provides detailed understanding of local strengths, challenges and priorities – insight that is essential for shaping growth that is inclusive and sustainable.
The Budget introduces multiple changes across welfare, housing, skills, economic regulation, environmental policy and tax. It will be important that new duties, regulatory requirements and expectations on councils are fully assessed, funded and phased to avoid adding further pressure on already stretched local services.
Finally, the absence of any reference to adult social care in the Budget represents a missed opportunity to address a widely recognised challenge.
People who rely on care and support, as well as those who provide it, will be understandably worried about the sustainability of services given no new funding was announced – despite the pressures across the sector.
Adult social care is the glue that helps hold many people’s lives together, supporting them to do the things that matter most to them. Strengthening and investing in this system is an investment in us all, and action is needed now.
Budget 2025 announcements
Council tax surcharge
- New high-value council tax surcharge of £2,500 to £4,500 a year on owners of residential properties in England worth £2-5 million or more.
- Revenue will be used to support funding for local services.
LGA view: We call on the Government to urgently work with us to address practical concerns about how it would work, and how to avoid issues such as the potential impact of non-compliance and appeals on council tax collection rates. Other unintended consequences, such as the implications of the scheme on any future council tax reform, also need to be considered.
Special educational needs and disabilities (SEND)
- SEND reforms to be published in the new year.
- Government to take on SEND costs from 2028/29.
LGA view: While it is positive the Government has committed to absorbing the costs of SEND, we await clarity on how this will be funded. It is vital that decisions on SEND funding are not made at the expense of mainstream school budgets. See also Budget ‘doesn’t address pressures on council finances’ regarding SEND deficits and home-to-school transport.
Alcohol licensing
- Launch of the first National Licensing Policy Framework.
- Updated guidance to ensure relevant authorities consider the need to promote economic growth in their licensing decisions.
LGA view: Councils are best placed to understand the unique needs of their communities and to strike the right balance between supporting local businesses and safeguarding residents. The imposition of a one-size-fits-all approach via a national framework will deny local communities a voice and marks a shift away from local democratic control.
Child poverty
- Removal of the two-child limit on the child element in universal credit.
LGA view*: Councils want to work with government to reduce child poverty and are pleased to see action that supports families who are working hard, but still struggling to make ends meet.
* Consensus could not be reached within the LGA on this position, so it reflects a majority view of the LGA’s political leadership
Homelessness
- Chief Secretary to the Treasury to lead value-for-money review on homelessness spending.
LGA view: It is important that the sector, including the LGA and local authorities, are involved and support this review to make best use of local government expertise… It is disappointing that there was no announcement around local housing allowance rates being uprated…
Growth funding
- £902 million over four years for a new local growth fund for 11 mayoral city regions in the North and Midlands.
- £500 million Mayoral Revolving Growth Fund for mayors in the North and Midlands with an integrated settlement.
- Mayoral strategic authorities to bid for around £7 billion through the successor to the Affordable Homes Programme.
LGA view: We welcome the creation of a new local growth fund for mayoral city regions in the North and Midlands, as well as the Mayoral Revolving Growth Fund. However, the decision to focus investment in mayoral areas underlines the challenge for those areas yet to secure a devolution settlement…Councils outside devolution areas are keen to play their part in driving inclusive economic growth and all communities stand to benefit from new investment.
Tourism levy
- Visitor levy on overnight visitor accommodation, to invest in local growth, including the visitor economy.
LGA view: The introduction of a tourism levy… marks a positive first step in recognising that meaningful devolution includes the power to raise appropriate local taxes. Local areas are best placed to ensure this additional funding is directed at the services and communities that bear the cost of welcoming and hosting visitors.
Skills
- Announcements on Connect to Work, the Youth Guarantee, and the Growth and Skills Levy.
- Launch of independent investigation to tackle rising youth inactivity, led by former Health Secretary Alan Milburn.
LGA view: The Government has not provided successor arrangements to the employment and skills element of the UK Shared Prosperity Fund (UKSPF), which will end in March 2026. This will impact areas outside devolution acutely, resulting in a significant loss of local jobs and skills support for residents not eligible or suitable for other more tightly defined national provision.
Electric vehicle excise duty
- New mileage charge for electric and plug-in hybrid cars, with effect from April 2028.
- Excise duty rates for cars, vans and motorcycles uprated in line with RPI from 1 April 2026.
LGA view: This… will add additional costs onto council budgets, and therefore local taxpayers, at a time when many councils are continuing to demonstrate leadership and make savings by the switch to zero and low emission fleets, including electric and plug-in hybrid.
- This is an edited version of the LGA’s Autumn Budget 2025 briefing. For more detail on the issues covered here and responses to other issues in the Budget – including business rates, childcare costs, carer’s allowance, social housing, growth, digital skills, apprenticeships, planning reform, potholes, playgrounds, health integration and neighbourhood health, soft drinks industry levy, tobacco and vapes licensing, trading standards, extended producer responsibility for packaging, landfill tax, electric vehicle charging infrastructure, combating crime, police governance, asylum and resettlement, and procurement – please read the briefing in full on the LGA website.