Local government finance settlement for 2022/23 announced

posted on 15 February 2022, updated on 15 February 2022

This House of Commons briefing paper provides an overview of the local government finance settlement 2022/23. The settlement will provide £16.3 billion in funding to English councils and the paper looks at the changes in local funding and what might happen next.

The 2022/23 settlement is a one-year settlement, based on decisions in the November 2021 spending review. That review announced a planned increase in grant funding for local government from £9.1 billion in 2021/22 to £12.7 billion in 2024/25. As the 2022/23 finance settlement is a one-year settlement, no information is available on how this increase will be distributed to local authorities in 2023/24 or 2024/25.

It's worth noting that the ongoing decrease in funding levels continues the pattern of the past few years, in which settlement funding makes up a smaller proportion of core spending power every year. Much of the difference has been made up by an increase in the council tax requirement – that is, councils are now expected to raise a higher proportion of their spending power from council tax than before. This proportion went from 49.3% of core spending power in 2015/16 to 60.2% in 2021/22. However, in the 2022/23 settlement, referendum thresholds for council tax increases stayed at 2% and the extra precept for councils with social care responsibilities was reduced from 3% to 1%.

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