Spending Review 2025: Reaction from the sector

The Government’s spending review has detailed plans to provide an additional £3.4 billion of grant funding in 2028‑29 compared to 2024‑25 to local government, as well as extra funding to build affordable homes, support adult social care and reform children’s social care.

More details about the spending review can be read here.

This article will be updated when further comment is received.

Cllr Louise Gittins, Chair of the Local Government Association

“It is positive that the Spending Review delivers on some key LGA asks. Funding announced for children’s services and SEND support will help more children get the right support and avoid reaching crisis point. We are also pleased at increased investment in the Affordable Homes Programme and the commitment to a 10-year rent settlement, which will support councils to invest in maintaining existing homes and ramping up vital new build programmes. Extra investment in places to support regeneration, transport and infrastructure is good news for residents and communities in these places.

“We will analyse the detail to assess the full impact on councils and communities. A recommitment to multi-year local government funding settlements is essential for financial planning while efficiency and innovation continues across local government. However, all councils will remain under severe financial pressure. Many will continue to have to increase council tax bills to try and protect services but still need to make further cutbacks. While government faced tough choices, future funding for adult social care is good news but a lack of significant extra government money needed to meet immediate pressures is worrying.

“We expect government to provide urgent clarity on how it plans to address high needs deficits, which are projected to rise to £5 billion next year, as part of its forthcoming SEND reforms. Over half of councils have warned they will become insolvent next year when the statutory override flexibility ends and we continue to urge government to write off these deficits.

“Public service reform and investment in prevention - especially in social care and SEND - can reduce costs and demand, and councils want to partner with government on this agenda. Council financial pressures are also exacerbated by an outdated funding system, so we look forward to the consultation on reform and a roadmap to a sustainable, long-term financial model for local government.”

Cllr Tim Oliver, Chair of the County Councils Network

“Today’s Spending Review was delivered in a very tight fiscal environment with several departments facing real-terms cuts so an increase in core funding for local government is important, as is the additional money for children’s services, special education needs reform and future funding for adult social care.

“However, this Spending Review will not be a silver bullet for councils’ financial challenges, and much of the increase in ‘core spending power’ is derived from the assumption that local authorities will levy maximum 5% council tax rises each year. Even accounting for these, the sums today fall well short of filling the projected £2.2bn funding gap faced by county and unitary councils next year and consequently further service cuts will be hard to avoid.

“In addition, county and rural unitary councils face significant added uncertainty on how much they will benefit from the announcements today, because forthcoming funding reforms could potentially redistribute hundreds of millions of pounds towards urban councils over the course of this Parliament. With the Spending Review confirming there will be little, if any, central government funding to provide the necessary resources to smooth out this redistribution, many county and unitary councils could ultimately face a real-terms reduction in funding.

“The mounting special educational needs and disabilities (SEND) service deficits are the burning platform for many local authorities yet there was no resolution in the Spending Review. We are now nine months away from a financial cliff edge when these multi-billion deficits are placed onto councils’ budget books, potentially rendering half of England’s county and unitary councils insolvent overnight.

“With the total deficit for county and unitary councils projected to reach at least £2.7bn next March when councils will have to address it, we need urgent clarity from government. Councils will soon start planning their budgets for next year and cannot afford to have this can kicked down the road any longer."

Cllr Jeremy Newmark, finance spokesperson of the District Councils’ Network 

“We welcome the Chancellor’s announcement of long-term investment to boost economic growth and support public services and strongly support the emphasis on capital spending.  

“But it is potentially counterproductive not to consider district council services in the same light – and the overall settlement for local government shows funding will fail to keep pace with rising demand for services. This could leave crucial preventative services, which have been shown to save the Exchequer significant sums in the long term, at risk. This includes leisure centres’ work to keep people healthy and out of hospital, home adaptations for older people which reduce demand for social care and early intervention to support people at risk of homelessness so they remain in safe, secure accommodation. 

“District councils work to get new, well-designed housing built, to regenerate town centres and to support local businesses all contributes to our national economic growth mission. However, unless it’s properly resourced, the risk is fewer new homes and jobs and less investment in our communities. 

“Any real-terms reduction in district council funding creates the risk of short-term gain for long-term pain. 

“The Government should place council preventative services on the same footing as other long-term investments and ensure they’re funded properly if it is not to be landed with massive bills in future.

“It is vital that the Government’s final package of reforms to the local government funding model properly funds district councils for the cost of the vital services they deliver and the severe pressures that many face from steep increases in homelessness and temporary accommodation.”

Florence Eshalomi, Chair of the Housing, Communities and Local Government (HCLG) Committee

“The Chancellor’s announcement of £39bn for affordable homes is welcome and will play an important role in efforts to deliver on the Government’s goal of building 1.5 million new homes in this Parliament.

“Decades of failure to build the social homes we need means that a record 126,000 families face the scourge of homelessness, spending years in so called ‘temporary accommodation’ while their health, work and education suffers. Today must be a turning point where we finally deliver the social homes people need up and down the country. We will be urging the Government to be clear on just how many social homes they expect this capital investment to deliver and whether they will set a target for Social Rent homes in the long-term housing strategy.

“MHCLG has a busy and important agenda; supporting councils who are in a precarious financial state, on building safety, on leasehold and renters reform, and on tackling rough sleeping. Getting these things right is critical for people right across England, and there are concerns that the level of spending outlined in Spending Review may leave these areas without the support they need. We look forward to questioning the Secretary of State on how the Spending Review will deliver on her Department’s priorities next month.”

Cllr Sir Stephen Houghton, Chair of the Special Interest Group of Municipal Authorities (SIGOMA) 

"It is very welcome to see the government’s focus on the most in need communities, particularly the focus on supporting 350 of the most deprived neighbourhoods, reforming the Green Book to invest more in towns and communities outside London and the South East and the significant commitment to affordable housing.

“We await details on funding for the schemes that are replacing the UK Shared Prosperity Fund. The successor schemes must deliver at least an equal level of funding that is currently received.

“Funding will still be very tight for councils and our members. The system remains under pressure, and we will be working closely with the government as they bring forward more substantial reforms to the local government finance system in time for the multi-year settlement in 2026/27. It is essential that these reforms build on the previous settlement’s focus on need and deliver a fairer funding system that provides a significant increase in funding for the most deprived communities."

Jonathan Werran, Chief Executive at Localis

“Local government and the local state will take some initial heart from the central thrust of the spending review, especially the promised land of multi-year settlements, improved needs assessments and simplified funding landscape to return local government to a sustainable financial position. This will provide the sector with greater certainty in long-term financial planning it has been yearning for.

“The review promises an increase in funding available for adult social care of over £4 billion in 2028-29 compared to this year, but until we have some fix on long-term funding of social care upon completion of Dame Louise Casey’s review, we will have to reserve judgment on the sustainability of local public services. 

“Certainty is a virtue but does not in itself plug the funding gap local government finance directors must hope to close nor the expectation gap of residents paying more each year in council tax for fewer visible benefits. Indirectly, revenue limitations on other departmental areas such criminal justice and police, flood defences and transport, will also have a direct knock-on impact on place across the spending review period.

“Angela Rayner has secured a big win for affordable and social housing with a £39bn funding boost over the next decade. The quantum is not big enough on its own to make the sort of generational shift in housing provision we saw in the immediate post war era, but in the circumstances, and with an extra £10bn for financial investments through Homes England to crowd in private investment, it is a highly creditable bit of spending review negotiating by MHCLG.”

Jonathan Carr-West, Chief Executive, Local Government Information Unit (LGIU)

“This was a ‘missions’ driven Spending Review - with eye-catching sums for projects aimed at delivering growth, clean energy and a 3% rise in spending on the NHS. Angela Rayner has clearly persuaded the Chancellor to put the affordable homes agenda front and centre of today’s statement, with that promise of £39bn. 

“It was a Spending Review full of hard choices for the government in the face of tough financial circumstances, a position all of us in local government are used to. These decisions will have major implications for local government and local communities across the country for years to come. 

“The Chancellor’s Spending Review also reinforced this government’s commitment to devolving power to regions across England, commits the government to major investments in housing and infrastructure, and pledges new funds to support regional and local growth across England and the devolved nations. This should be welcomed. 

“While today was never going to answer every unanswered question that local government has, it does outline when we might expect at least a few answers. Reorganisation, changes to the allocation of funding settlements, devolution, SEND reform, and, eventually, social care funding reform, all of these were promised in the Spending Review. They are all crucial to putting local government back on a sustainable footing - but they have all been promised before.

“Optimal delivery of every single one of the government’s missions needs robust and financially stable local government. And once again, the government’s plans for how that will be achieved are left dangling just out of reach.”

Rachael Wardell, President of the Association of Directors of Children's Services 

“It is good to see the Government commit more than a billion pounds over the next three years to support the continued transformation of children’s social care and investment in improving and developing placements for children in care. Continued investment in family hubs is similarly welcome along with the real terms uplift in funding for schools.

“The growing crisis in special educational needs and disabilities (SEND) needs to be urgently addressed and we look forward to seeing the detail of reforms here in a White Paper this autumn and what will be in the Child Poverty Strategy.

“Too many children and young people are being left without the support they need to thrive, with long waits and under-resourced services leaving families struggling. This Spending Review period provides a unique opportunity to transform this experience and ensure every child and their family can benefit and realise their full potential.”

Matthew Waters, partner at Devonshires

“Clearly this is excellent news for the [housing] sector - a doubling of investment, and as much investment certainty. Moving to a 10-year cycle for both rent and grant will enable existing registered providers to make long term plans for delivery; it will also provide confidence to investors into the sector both existing and new to make long term commitments.”

Suzanne Benson, partner and Head of Real Estate at Trowers & Hamlins

“The scale of the Government’s £39 billion commitment to social and affordable housing funding, combined with the certainty of a 10 year rent settlement, provides a real opportunity for growth across both the new homes sector and for wider regeneration. It has the potential to stimulate house building across the tenures and should provide a platform for creative partnership working between the private and public sector.”

Gabor Taller, partner and co-head of social housing at Browne Jacobson

“A new £39bn 10-year Affordable Homes Programme is being described as ‘transformative’ and a ‘watershed moment’ by the housing sector, providing a potentially once-in-a-generation opportunity to boost the provision of social housing in England.

“Coupled with the 10-year rent settlement, a pledge to consult on how social rent convergence can be implemented and giving housing associations equal access to building safety funding, this package of measures provides housing associations – and their partners – with the certainty they have been severely lacking in recent years.

“Details are still to come on aspects such as the types of homes to be prioritised, the ratio between social rented and shared ownership, the role of modern methods of construction and the involvement of SME developers – while there’s also plenty of work to do in practically closing construction skills gaps despite separate funding pledges.

“The government’s manifesto said it would deliver the biggest increase in supply of social and affordable homes in a generation – and these announcements signal a transition from policy to practice.”

Cathy Ashley OBE, Chief Executive of Family Rights Group

“Family Rights Group strongly welcomes the Government’s commitment to investing in a children’s social care system where families get help early before their problems escalate. It is critical to ensuring more children can stay safely in their families and care experienced young people can access the support they need to thrive in life. We have long campaigned for the reform and investment needed to make that happen.

“A £1billion investment in children’s social care announced today, alongside an expansion of free school meals, childcare entitlements and the previously announced prevention grant, is a significant step towards delivering the ambition of a family-first child welfare system and tackling the scourge of child poverty.”

Stephen Teagle, Chief Executive, Partnerships and Regeneration at Vistry Group

“This Government has recognised that investing in housebuilding is critical to delivering economic growth and is delivering on its promise to make a generational change in the delivery of affordable housing. We welcome the Chancellor’s confirmation in the Spending Review of an unprecedented £39 billion in funding for the next Affordable Homes Programme (AHP) as well as a 10-year social rent settlement for registered providers and local authorities, which will have a transformative impact on our ability to deliver affordable and mixed tenure homes up and down the country. It is great news for our partner housing associations and local authorities, great news for the economy and great news for the thousands denied access to an affordable home."