Entrenched financial strain on councils continues to impact health and exacerbate inequalities

Commenting on the publication today of the final local government finance settlement, Katherine Merrifield, Assistant Director in the Healthy Lives team at the Health Foundation, said: 

'Today’s announcement confirms that local authorities will see a 7.5% cash terms increase in core spending power next year. This includes a guaranteed increase in core spending power of 4% before decisions on council tax, alongside a £500m boost in social care grants announced in January. However, it will do little to stabilise councils' increasingly precarious financial situations. 

'This settlement will leave council budgets with an estimated £1bn deficit, with core spending power around 12% lower in real terms than in 2010/11. This shortfall – against a backdrop of long-term underfunding – means councils must make near-impossible decisions to cut services. This will impact local people’s health as they may no longer be able to access many of the services they rely on, such as decent housing, good education, leisure facilities, libraries, community centres and public transport.

'The 7.5% uplift also relies on every local authority increasing council tax by the maximum permitted without a referendum. This will increase pressure on households already struggling with the cost-of-living crisis, raising the risk of mental health issues and leaving many unable to afford the basics, such as food and heating. Furthermore, recent analysis demonstrates that deprived areas tend to receive less funding relative to need; this uplift is no exception, likely exacerbating health inequalities.

'Public health teams will also face financial strain. Despite a 2.1% cash uplift on 2023/24 provided in the public health grant, public health funding per person remains 27% lower in real terms in 2024/25 than in 2015/16, requiring some preventative services to be cut – particularly in more deprived areas where reductions in public health allocations tend to be largest – which will detrimentally impact population health and health inequalities.

'Finally, while extra money for social care is welcome, it will do little to address the huge pressures on the adult social care system, which continues to face increasing demand, significant staff shortages, and rising costs. 

'To improve the nation's health, local government funding must be sufficient, sustainable, and proportionate to need. This requires urgent attention from the next government.'

Media contact

Billie Morgan
Billie.morgan@health.org.uk
020 7257 8000