Resetting the relationship between local and national government. Read our Local Government White Paper

Local Government White Paper

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There has never been a more difficult time for local government. Rising demand and costs have meant the toughest of choices, with less to spend on the services that communities value. Yet the sector continues to show great resilience and continues to innovate.


There has never been a more difficult time for local government. Rising demand and costs have meant the toughest of choices, with less to spend on the services that communities value. Yet the sector continues to show great resilience and continues to innovate.

Local government is the key to solving some of our biggest national challenges. We work at the front line of people’s daily lives. We shape places, provide vital services which hold our communities together, keep people safe, and create the conditions for prosperity and wellbeing.

Now must be a time for change and new hope. The LGA has consulted widely, including with over 200 local authority Leaders and 150 local authority Chief Executives across England. Their messages are clear.

We start from a strong base. Rooted in a democratic mandate, councils are inherently close to their local communities and can deliver tailored services to address specific needs. This has been seen recently in the sector’s universal response to the COVID-19 pandemic and the Homes for Ukraine scheme. Offering over 800 services and working with a broad range of partners, councils can convene tailored solutions for our residents, including people of all ages – who access council services to help live their best life.

Now must be a time for change and new hope.

Local government has what it takes to deliver inclusive growth in partnership with the next government. We are ambitious for our communities and know that many more residents can be supported back into work.

Sustainable funding is essential for local government’s important, wide remit. We now need bold, creative solutions. We must get back to longer term settlements, an end to the proliferation of funding pots, and straightforward accountability based on outcomes for residents.

We are pressing for immediate change so local government can start to build back straight away for communities. This means practical action on the biggest challenges, including better support for children, homeless families, adults who draw on care and support, and on climate change.

We also have a plan for longer-term reform. It is time to give local government the powers needed to deliver our ambitions for place-making. We represent local residents and are uniquely placed to bring agencies together around their needs. We work together to provide support to places facing the biggest challenges. 

It is time to give prevention the focus it deserves. Through community services, we can help people stay well from early years to later life. This is as much about supporting mental as physical health. As a nation, we must stop wasting public money by only intervening at the point of crisis. 

It is time for equal partnership between local and national government. We have so much to offer. This must be a relationship based on trust, where people are at the heart of everything we do. 

Together let’s commit to five priorities to drive change: 

  • An equal, respectful partnership between local and national government – a genuine partnership model backed by statute, based on best international practice.
  • Sufficient and sustainable funding – with multi-year settlements and combined funding pots so that local services can develop and transform.
  • Backing local government as place leaders – with new powers to bring partners together to get services working better, drive inclusive growth and regulate failing markets. 
  • A new focus on prevention and services for the wider community – joint action with the NHS to keep people well from birth to later life, alongside action on housing and homelessness. 
  • Innovation and freedom from bureaucracy – ending bureaucratic reporting and exploiting the full potential of technology including AI.

But to address the longer-term issues we are facing we need an honest and open dialogue about what local government needs to be in the future. What is the scale of support we want to be able to provide and how should it be delivered? Are we to be the local safety net or is our future role broader than this? Now is the time for radical thinking to prepare for a new future.

To support this dialogue, we want to work with the next government on three new opportunities to take the thinking forward:

  • New equal and respectful central-local partnership: the next government should establish a new partnership model for working with local government and delivering the recommendations set out in this paper.
  • Review of place-based public service reform: the next government should commission a major new review of how public services can work together to transform places, including through invest-to-save models of prevention.
  • Further improving cost-effectiveness and innovation: the next government should work with us to bring together learning across government departments on ‘what works’ to increase cost-effectiveness and innovation, enabling the development of cross-cutting solutions. We will support this by contributing learning from existing sector-led improvement support and best practice from local government.

Now must be a time for change and new hope. With the right support and the right reforms, we can do much more to get better outcomes for residents in the places we represent, and for the whole country.

A long thin banner with colourful squares consisting of greens, blues, oranges, purples and pinks running across.

Introduction: challenges and opportunities

Local government works at the front line of our daily lives. We all depend on local government to keep our streets clean, empty our bins, provide leisure and cultural opportunities, promote the public’s health, keep children safe and support people of all ages to live a fulfilling life. 

Throughout our lives local government has a crucial role, but it also holds the keys to addressing the huge challenges facing our country. Across so many aspects of our lives it is Town Halls not Whitehall that can really make a difference. Local leaders shape our places, tackle difficult decisions, provide vital services which hold our communities together, keep people safe, and create the conditions for prosperity and inclusive growth. 

On many of the issues that matter most it is local government which is best placed to make the biggest and fastest difference to the prosperity and wellbeing of citizens, as providers and convenors of key public services and as place leaders who hold the keys to inclusive local economic growth and community wellbeing.

A long thin banner with colourful squares consisting of greens, blues, oranges, purples and pinks running across.

Tackling the biggest challenges – now and into the future

Local government faces huge challenges right now in meeting people’s needs. Record numbers of homeless families and children are in temporary accommodation, and housing waiting lists continue to grow. Adult social care is under continued pressure as demand rises. There are spiralling costs and pressures for children’s social care and Special Educational Needs and Disabilities (SEND), including home-school transport. 


We want to work with the next government to focus on the big national challenges affecting communities across the country.

We want to work with the next government to tackle these pressing issues. But we also need to work together over time to tackle their root causes and the fundamental long-term challenges facing our communities, including trends in ageing, children needing support, the housing market, spiralling costs and demand, and climate change. Underlying this, we must maintain a clear focus on delivering inclusive growth and boosting productivity in local economies, to fund the investment that this reform will require.

Those challenges mean we must think differently and be prepared to take really difficult decisions now and into the future. 

We want to work with the next government to focus on the big national challenges affecting communities across the country:

1) Delivering inclusive growth

Inclusive growth and productivity are essential over the next five years and beyond

The public wants to see a return to greater prosperity, with fairer distribution of wealth, alongside protection of the environment. The right type of investment in labour and technologies in the right place can lead to increased productivity. The key question is what infrastructure and skills we need in different parts of the country to deliver a stronger economy, and where those decisions should be made.

National initiatives alone cannot boost inclusive growth and tackle the productivity gap

Many of the country’s productivity challenges have been around for decades and our current centralised approach hasn’t been up to solving them. Increasing productivity in every part of England is essential to increasing incomes and reducing inequality. Since the financial crisis of 2008, productivity in the UK has flatlined. Nearly half of the English sub-regions are 10 per cent or more below the English average and around one in every six is 20 per cent or more below the English average. We know from international comparisons that devolution, which builds on good government and high levels of local integration, can have a transforming impact on productivity.[1]

In growing our economy we want to make sure that we are at the forefront of new technologies and are nurturing the skilled workforce to make this happen. However, it is also necessary to recognise the value and importance of the foundational economy, including hospitality, retail and care, which provide vital services to our communities and many of the jobs in local areas. Making sure that these jobs are appropriately structured and paid will be an important strand in meeting the expectations of communities.

Local government has a crucial role to play

Local economies differ widely across the country in terms of their sectoral composition and their paths to higher productivity, but there are factors that influence economic performance in any setting. Under an umbrella of devolution, one which supplies long-term financial certainty, financial flexibility and some additional powers, local authorities and their partners can achieve better outcomes across key factors that influence inclusive growth including transport, skills and employment support, health and wellbeing of the workforce, and housing.

Skills: Our analysis shows £20 billion is spent on at least 49 national employment and skills related schemes or services managed by multiple Whitehall departments and agencies which are fragmented and complicated. This leads to disconnected, ineffective support for service users and employers which fails to adequately reflect the different needs across regions. We need a reformed and ambitious employment and skills offer linked to local services and meeting local need which requires councils, businesses, local further education colleges and other local bodies to work together to deliver on these issues within a supportive national framework

Local transport: Investment in local transport infrastructure is integral to inclusive growth and increases productivity, but the mechanisms through which this happens are unclear. Where and how to invest in transport infrastructure is critical. It requires local, specific understanding of the distribution and challenges of the workforce and businesses in various sectors. Only councils and partners locally can do this.

Housing: Understanding local housing markets is critical. Given the general undersupply of housing, cities, towns and more rural areas, we need to be able to meet the current demand for housing but also plan for inclusive growth where appropriate. Getting the right mix of tenure and cost is key to attracting and keeping a skilled workforce. Linking housing provision to the public transport system is key if the country is to meet its net zero ambitions. Through the local planning process, councils can look at all options to achieve this, including densification around transport hubs.

Health and wellbeing: Local government has a key role to play in reducing socioeconomic inequality, so that all local people can both contribute to and benefit from inclusive growth. Health inequalities are strongly associated with wider deprivation and disadvantage. Poor mental and physical health acts as a brake on productivity and inclusive growth, preventing people from participating fully in local labour markets. Local government understands the challenges and opportunities in communities and is best-placed to develop community-based services that enable people to access the support they need. 

To address the long-term challenges of poor productivity and regional inequality requires long term solutions. In addition to wider reforms to the local government finance system we call on the government to ensure future growth funding cycles are allocated on a six-to-eight-year basis as consolidated pots for councils to invest according to local need.

There is an increasing body of evidence showing that productivity growth and gaps are determined at the subnational level rather than at the level of firms or the nation. This means that it is much more difficult for a top-down approach on its own to deal with these issues. International comparisons show that our current centralised approach is ineffective in addressing the challenges. Conversely, the growth seen in Manchester in recent years has shown what can be achieved through a bolder approach to devolution.

Example: Manchester

Productivity growth in UK city-regions

Graph displays city region productivity growth by region and Greater Manchester sub region growth 2004 - 2020

  • Transport and property led growth.
  • Enabled by empowered local leadership. 
  • Productivity growth in last 20 years outpacing other city regions including London.
  • Productivity growth in all parts of GM.

Northern Powerhouse Partnership June 2023

Councils and combined authority areas are the right levels at which to coordinate activity to meet community expectations on economic, social and environmental challenges. We know it can’t be done from Whitehall. With the right capacity and within a stable framework, councils and combined authorities can deliver the transformation to the higher skilled, green and fair economy that communities expect. This will bring about conditions for increased capital investment, improved productivity and better, inclusive and sustainable, economic growth.

Central government must set the framework for decentralisation. It should retain responsibilities for:

  • Macroeconomic stability.
  • Trade arrangements with other countries and blocks.
  • Nationally significant infrastructure.
  • Making and enforcing the rules on market engagement.
  • Minimum standards and quality of goods and services.

Everything else to do with economic development should be devolved to the most appropriate local level. We must do what we can quickly, but also recognise that this is a long-term project that requires transformation at local and national level. This level of change requires cross-party commitment because it will need to be sustained over multiple governmental mandates. 

To better drive inclusive growth and prosperity we want to co-design an enhanced framework for devolution and local growth, drawing on the reserved powers model of Scotland and Wales to underpin a radical transfer of power to our communities.

In the short-term, together let’s deliver: 

  • A clear, long-term and place-led economic strategy that builds on local enterprise partnership integration and wider devolution to set out a joint vision for inclusive growth and prosperity across England.
  • Joint work to deliver a place-based employment and skills offer to improve outcomes for young people and adults that need to secure and progress in work, support employers with their skills needs, and develop a culture of lifelong learning.
  • Immediate action to stabilise the existing growth funding landscape to ensure continued investment and build capacity to develop an integrated multi-year growth fund.
  • A much stronger focus on data to inform local and national strategies around growth and prosperity. 
  • Investment in local economic development capabilities to boost council capacity and expertise. 

2) Building the homes we need 

A housing crisis

Construction of new homes has failed to keep pace with population growth and demographic change, particularly due to the decline of public housebuilding. Our member councils have raised significant concerns about the rising cost of living, the impact of asylum and resettlement programmes, and an insufficient supply of affordable housing. These are driving increases in homelessness and reducing councils’ ability to source suitable accommodation.

Evictions from the private rented sector are a key driver of homelessness, with almost 26,000 households threatened with homelessness because of “no fault” Section 21 evictions in 2023.

There are 1.29 million households on council waiting lists, and the number of households living in temporary accommodation has risen by more than 90 per cent over the past decade to almost 113,000 including 145,800 children – the highest figures since records began in 1998. Spending on temporary accommodation has spiralled to more than £1.75 billion and is budgeted to increase by 19.9 per cent in 2023/24. Most of this cost can’t be recouped by councils due to limits on temporary accommodation subsidy, which is frozen at 90 per cent of 2011 Local Housing Allowance (LHA) rates.

The number of households living in temporary accommodation has risen by more than 90 per cent over the past decade


Against the context of wider financial pressures on councils, council spend is increasingly concentrated on reactive, demand-led provision that supports those in immediate need, meaning they are less able to invest in early preventative measures that stop these occurring.

To meet these challenges, we urgently need reforms which support councils to boost the supply of housing and provide sustainable funding for those in need.

In the short-term, together let’s deliver:

  • Reform of Right to Buy to support 1:1 replacement of existing social housing to avoid continued net loss of stock. This should include allowing councils to retain 100 per cent of sales receipts; flexibility to combine receipts with other government grants; the ability to set the size of discounts locally; and exempting new build.
  • Abolition of permitted development rights and reform of viability assessments for proposed housing developments, with all planning applications required to deliver affordable housing requirements as per Local Plans.
  • Bring forward new legislation to ban Section 21 “no fault” evictions of renters.
  • Further investment in social housing by allowing local government continued access to preferential borrowing rates through the Public Works Loan Board for housing, with each additional £5 million provided through this scheme estimated to provide up to £150 million in savings and additional investment into social housing[2] .
  • An increase in Affordable Homes Programme (AHP) grant levels per unit to deliver more new affordable homes and ensure inflationary pressures do not jeopardise continued delivery.
  • A commitment to uprate LHA rates to the 30th percentile of local rents beyond 2025/26.
  • An immediate increase in the subsidy for temporary accommodation, so that it is no longer frozen at 90 per cent of 2011 LHA rates.

In the longer-term, together let’s deliver: 

  • A programme of 100,000 high-quality, climate friendly social homes a year, which would improve the public finances by £24.5 billion over 30 years. This includes a £780 per year reduction in the housing benefit bill for every new social home built and a reduction in temporary accommodation costs. 
  • Councils need to be empowered to build more affordable, good quality homes quickly and at a scale where these are locally needed, to help families struggling to meet housing costs and tackle housing waiting lists.
  • Strengthened Housing Revenue Accounts via a long-term rent settlement and restoration of lost revenue due to rent cap/cuts, to give councils certainty on rental income and support long-term business planning. 
  • The roll out of five-year local housing deals by 2025 to all areas of the country that want them – combining funding from multiple national housing programmes into a single pot. This will provide certainty and efficiencies and could support delivery of an additional 200,000 social homes in a 30-year period. 
  • Government support to set up a new local Housing Advisory Service. This would bring together a team of experts to provide additional capacity and improvement support tools for councils as direct deliverers of housing and development partners, as well as registered providers of social housing.
  • Publication of a cross-departmental strategy setting out national commitments to prevent homelessness, including developing an implementation plan, monitoring and reporting departments’ contribution, and ensuring that local delivery agents contribute to prevention activity and targets through local homelessness strategies.

3) Supporting our children and young people

Children and young people are our future, yet too many do not have the happy and healthy lives they deserve. The prevalence of mental health problems has risen significantly, and many more children are diagnosed with Special Educational Needs and Disabilities (SEND), such as autism, and unable to access the support they need. The education system is generally not incentivising or prioritising inclusion. Cost of living pressures are affecting many families.

For children in care, there is a lack of high-quality placements and escalating costs for those with the greatest needs. There are unresolved pressures across the children’s workforce. 

Children’s social care budgets are up by 13.6 per cent in 2023/24 compared to 2022/23 - driven by huge increases in placement costs. LGA research has shown that in 2022/23 councils paid for over 1,500 placements for children in care that cost £10,000 or more per week – more than 10 times the number purchased at this price in 2018/19.

Costs of home-to-school transport are escalating for children with SEND, with budgets up by 23.3 per cent in 2023/24 compared to the previous year[3]. This is driven by ongoing growth in the number of children with Education, Health and Care Plans. Budgeted net spend in 2023/24 is £1.4 billion, a 137 per cent cash terms increase since 2016/17.

Children’s social care budgets are up by 13.6 per cent in 2023/24 compared to 2022/23


Despite demand and cost pressures, local government continues to work hard to provide the best possible evidence-based services. We know that holistic approaches working cross-council and cross-agency around the needs of children and families are most effective. A stronger partnership between local government, the NHS, colleges and schools, backed by new powers for councils to hold education and health partners to account, would mean that parents see earlier intervention and support for their children, more of whom can stay in mainstream local settings, schools and colleges.

There is significant evidence of the benefits of supporting children well in the first 1001[4] days, and how to do that, to improve long term outcomes. The Sure Start model has been shown to improve health and education outcomes for children. High quality, affordable early education and childcare can close the disadvantage gap and ensure children’s needs, including special educational needs and disabilities, are recognised and responded to early. Having access to a trusted adult can help prevent vulnerable young people being involved in risk-taking behaviour and improve outcomes. 

Despite demand and cost pressures, local government continues to work hard to provide the best possible evidence-based services.

Where children are at risk of significant harm, it is important to improve access to early help and support more children to stay safely at home with their families where possible but, we have concerns about the funding available and current pace of change. While we support many current reforms to SEND provision, we do not believe they go far enough to deliver better outcomes for children and young people, give councils the powers to effectively lead local SEND systems or relieve pressure on over-stretched high needs budgets.

In the short-term, together let’s deliver:

  • The writing off of all Dedicated Schools Grant deficits to relieve the associated financial pressures that councils are currently facing.
  • Pausing Ofsted and Care Quality Commission SEND area inspections and refocussing the inspectorates’ activity on identifying the national, systemic issues with the SEND system and using their findings to help inform how the system can be improved.
  • Action to build capacity in mainstream education to meet the needs of children and young people with SEND.
  • Work to start on a cross-government plan for children, identifying the ways in which all departments and their associated local agencies can support better outcomes for children – supported by improved budget sharing at a local level.
  • Further action to tackle cost of living pressures so that all families have enough money to live on, rather than just survive.
  • A review of early years education and childcare to ensure there is a sufficiently well trained and skilled workforce, early years entitlements are properly funded, and councils are resourced and have the tools to deliver on their sufficiency duty.

In the longer-term, together let’s deliver:

  • Significantly improved access to children’s mental health and wellbeing services, ensuring children have access to the enriching activities that they need to live well, receive earlier help and reducing the need for more intensive support.
  • Access to appropriate placements for all children in care and children in secure settings – this includes meeting children’s individual needs and being able to live close to home (where appropriate), with placement costs providing good value for taxpayers’ money.
  • The introduction of a separate judgement on inclusion in the Ofsted school inspection framework. This would mean that only schools that can show they are inclusive of children with SEND, reflecting the demographics of their local area, can be rated as ‘Good’ or ‘Outstanding’. This will support inclusive schools and help build parents' confidence that their children's needs can be met in mainstream education.
  • Reframing roles and responsibilities across education, health and care to recognise the joint responsibilities within a local SEND system, encourage joint working, and align responsibilities with decision-making powers. 
  • Reform of the SEND statutory framework, specifically the definition of additional/special educational needs, and the role of statutory plans, avoiding the lack of clarity in the current definitions and statutory tests. In a future system based on meeting young people’s needs within a broader mainstream offer, there would be less need for a separate system to secure provision through individual entitlements and statutory plans. 

4) Reforming and sustainably funding adult social care 

At its best, adult social care helps ensure that everyone can pursue the things that matter most to them, irrespective of their age or conditions. Yet this core purpose of adult social care, and its intrinsic value to us all, is not well enough understood. Changing this could help unlock more public support, making it possible to spread the very best practice that exists across the country.

The financial position of adult social care remains seriously challenging. Surveys by the Association of Directors of Adult Social Services show that 63 per cent of councils overspent on their adult social care budgets in 2022/23. Of these, the proportion using their reserves to fund overspends increased from 37 per cent in 2021/22 to 72 per cent in 2022/23. One-off funding to service recurrent spending is unsustainable.[5]

This has very real consequences. Over 470,000 people are waiting for an assessment, a package of care or direct payment to start, or a care plan review.[6]

63 per cent of councils overspent on their adult social care budgets in 2022/23


It is a similar story with the care workforce. Workforce numbers have picked up slightly (20,000 increase between 2021/22 and 2022/23) and vacancy rates have decreased to 9.9 per cent from 10.6 per cent, but the number of filled posts is still below pre-pandemic levels, and the vacancy rate remains stubbornly high.[7]

The strain on unpaid carers is also a real issue. Carers UK survey work shows that more carers are cutting back on hobbies and leisure activities, and more unpaid carers are struggling to make ends meet.[8]

Demography is a key driver of pressures, but this is not just about growing numbers of older people. From 2015/16 to 2021/22, the number of working-age adults receiving long-term care rose by 1.4 per cent, while the corresponding number of older people fell by 10 per cent. In 2021/22, councils spent roughly the same amount of money (£8.3 billion) on long-term support for both working-age adults and older people, despite many more thousands of older people being supported (529,000 older people, compared to 289,000 people of working age).[9]

Stabilising and supporting the care workforce must be an immediate priority. One-off increases in pay and/or retention bonuses (particularly as we look ahead to winter) would help, but we need a long-term plan for the care workforce, which includes measures to improve pay for the long-term. This needs to be positioned not just as crucial for people drawing on social care, but also crucial in terms of social care’s contribution to the economy. Skills for Care estimate that the sector contributes £55.7 billion gross value added per annum to the economy in England[10].

The Resolution Foundation have calculated that if a living wage for care workers was publicly funded, just under half (47 per cent) of public costs would be returned to the Exchequer through higher personal tax receipts and lower benefit payments[11].

We need a major push on prevention. An incoming government should be ambitious in looking at the case for a prevention grant with spend determined by councils to enable them to properly meet their Care Act prevention duty. This would help expand the provision of short-term care, particularly reablement[12] which is well evidenced. It would widen the remit to include others coming into contact with adult social care who could benefit, beyond the current narrow focus on supporting hospital discharge. It would provide additional supported housing services, given the significant positive impact this has on residents’ health, wellbeing and social connections, as well as the role it plays in reducing homelessness and relieving pressures on the care, health, criminal justice and housing sectors.

In the short-term, together let’s deliver: 

  • Adult social care funded adequately, sustainably and with trust in councils as democratically accountable bodies. The exact funding requirement should be identified through a collaborative process, but we broadly support the Health Foundation’s analysis of the uplifts that would be required. 
  • Support for the voluntary sector, which can mobilise quickly and provide access to an additional workforce. Services such as ‘sitting services’ (which provides reassurance for people who may not need care but are concerned at being alone after discharge), unpaid carer support, handyperson services, and home from hospital services can all play a key role in meeting low-level needs after discharge, as well contributing to preventing possible readmission.
  • Support for unpaid carers who are the backbone of care. Too many of these people are suffering ‘burnout’ and the labour market is losing too many people, especially those in their 50s, who are having to give up work to care.
  • More therapeutic-led reablement – intensive short-term interventions with follow-up support – which support recovery after time spent in hospital.
  • Increased care worker pay – including one-off increases and/or retention bonuses – to help tackle the serious recruitment and retention issues facing the sector. The costs for any such increases must be met in full by genuinely new funding from government.
  • Robust commissioning arrangements to ensure that the commissioning system does not create two tier systems and lead to disagreements between councils, the NHS and the care sector.

In the longer-term, together let’s deliver:

  • Joint work with government to reform the approach to adult social care, and better joint working between the NHS and local government to support people.
  • Focus on prevention and recovery services, including steps to support the voluntary sector to provide fast, low-level support.
  • Investment in primary and community services and intermediate care that is multidisciplinary and can resolve crises in health and care, avoiding hospital admission and helping people back on their feet.
  • Tackling the long-standing issue of care worker pay through the commission of an independent review to make recommendations (that are accompanied by the requisite national funding from government) on the levels of pay in the sector and how pay, terms and conditions are determined.

5) Supporting place-making

Place shaping

We are the democratically elected leaders of local places and understand the ambitions our local communities have. Whether leading during a crisis such as COVID-19 or delivering a long-term economic or planning strategy, it is our role to speak for our local communities and deliver on their aspirations for the local area.

Local government does not just provide statutory services: it has a crucial place-shaping role.

We are the democratically elected leaders of local places and understand the ambitions our local communities have.

We are uniquely positioned to bring agencies together around the needs of residents. We know from experience that you cannot build a safe and thriving high-street from a desk in Whitehall. Local leaders and communities must be empowered to take control of and shape the area in which they live through a genuinely local, plan-led planning system.

Some of the local government functions that people most value are not the demand-led statutory services for people with the greatest needs, but the things that give each place its unique character: parks and libraries, leisure and cultural services, youth services and high streets and more. Budgets for these place-making services, which are a source of local pride as well as being central to councils’ democratic mandate, have been squeezed as the overall funding envelope has been cut. There is a gap between what local communities need and want, which local government wants too, and what local government is currently funded to deliver. 

Cost and demand pressures are rising faster than funding

A fundamental challenge facing the sector is that cost and demand pressures are rising faster than funding. Our analysis shows that by 2024/25 these pressures will have added £15 billion (28.6 per cent) to the cost of delivering council services since 2021/22. In addition to facing the economy and sector-wide inflationary and wage pressures, councils face many individual service areas where cost and demand dynamics exert even higher cost pressures.

Based on our modelling of councils' future cost pressures and income we estimate that councils face a funding gap of £2.3 billion in 2025/26 and £3.9 billion in 2026/27. These gaps relate to the funding needed just to maintain services at their current levels. Councils do not have enough funding simply to stand still. 

We estimate that councils face a funding gap of £2.3 billion in 2025/26 and £3.9 billion in 2026/27


In addition to cost and demand pressures councils have also faced a 22.2 per cent cut in core spending power from 2010/11 to 2024/25. The combination of reduced funding and increased cost and demand pressures has resulted in financial resilience in local government being at an all-time low. An LGA survey following the 2023 Autumn Statement showed that one in five leaders and chief executives felt they are at risk of receiving a Section 114 report this year or next. 

As funding has fallen, councils have focused their spending on meeting their statutory obligations. This has led to a reduction in spending on preventative services and a greater focus on reactive, demand-led provision. This is despite the growing body of evidence of the financial and social benefits of prevention.

It also means that councils have been less able to do the things that will boost the economy and improve economic productivity locally. Between 2010/11 and 2023/24 councils’ overall service budgets fell by just over 10 per cent in real terms, but the need to spend money on adult and children’s services meant that budgets for Planning, Cultural Services, Highways and Transport, and Housing were each reduced by more than 45 per cent.

A new approach

We need a new approach to maximise the value of place by allowing more variation, not less. We need devolution that transfers powers to communities, which recognises that local authorities and their leaders are best placed to make decisions for their placescombined with sufficient funding so that they can deliver local priorities that go beyond their statutory obligations. Only then can councils deliver on this crucial place shaping role.

6) Backing local climate action

Climate change is an urgent and mounting threat to human wellbeing and the health of the planet. Its impacts risk upending every ambition we hold for people, places and services. Its solutions demand action from everyone at every level and in every place. We understand the challenge, we have the solutions, and we know they achieve multiple co-benefits for health, jobs and inclusive growth; but delivering action is not straightforward.

Local government’s offer is enormous. As community and place leaders, as housing, planning, transport, environment, and health authorities, and as procurers, asset holders, land managers, conveners, and enablers, we hold the key to adapting places to the climate risks identified by the Climate Change Committee - reducing their impact on people, growth and infrastructure, including as emergency and resilience planners. 

Only local government can lead, mobilise and connect action in places; councils demonstrate this every day. We hold influence to drive down a third[13] of every place’s carbon emissions, and to do it most efficiently and effectively. 

Local climate action can achieve net zero for half the cost of a national approach[14] and deliver three times the growth, jobs, skills and health benefits.

Climate change will cost at least 3.3 per cent of GDP up to 2050, and over 15 per cent of GDP in some council areas, under current mitigation policies[15]. Public concern remains high, and demand for action will likely harden with every extreme weather event. 

Local climate action can achieve net zero for half the cost of a national approach


Local government is united in the call for clarity, certainty, and a long-term delivery plan to achieve net zero by 2050. There is cross party consensus on the need to back local climate action on net zero and adaptation. Every expert intervention calls on it to go further and faster in empowering local climate action. 

However, there is an ongoing lack of certainty around how local effort fits into a national delivery plan. Councils receive no core funding and instead are forced into competitions from a labyrinth of small, siloed pots, and local efforts are routinely undermined by national decisions. Eight in ten councils have low confidence UK will achieve net zero homes, travel, and energy by 2050; 90 per cent do not think there is a sufficient clear and scaled plan in place[16]. Internationally, we are falling behind others powering ahead with climate action.

There is great ambition for what local government can achieve. But we must step up action in the next five years.

Climate action presents enormous opportunities for the long-term rewiring of public services in ways that best deliver the transition to a sustainable future. We have three core proposals to a new government:

First, work with local government on a renewed Local Climate Action Delivery Programme to provide the step change needed for moving forward local climate action. It must focus on building a single national framework for mitigation and adaptation that rapidly provides clarity on roles, responsibilities, and powers between local and national government. It should replace the Local Net Zero Forum which has not achieved its aims or potential.

Second, focus the Local Climate Action Delivery Programme on 10 local climate action missions to reduce emission and adapt to climate change up to 2050:

  • Build public trust and inclusivity. Step up engagement with communities on climate action, national clarity reinforced locally by programmes building trust around changes in place, and street by street support on their own climate action journey.
  • Rapidly retrofit social and fuel poor homes. Bring forward and devolve all funding for retrofitting social and fuel poor homes, to councils with flexibility to build local programmes that accelerate retrofit homes with energy efficiency measures, clean heat technologies and networks, and climate risk adaptations; and do so in ways that build supply chains, drive markets, and create scale to attract private finance.
  • One public estate retrofit. Bring forward investments into whole-place retrofitting of local public buildings – councils, schools, hospitals – into single scaled programmes to cut carbon and adapt to risks, and in ways to drive change in commercial property.
  • Local power plan. Create local energy strategies that build the pipeline of projects for local energy generation, and shape investment in local and regional grid infrastructure in ways that are supported by communities and where costs and benefits are fairly distributed.
  • Electric, public and people powered transport. Devolve to councils the means to locally mix active travel, electric vehicles, and public transport; and provide a support framework for councils’ demand management schemes.
  • Deliver zero waste through the polluter pays principle. Ensure schemes like the extension of the Emissions Trading Scheme to Energy from Waste pass costs onto producers with incentives to reduce waste and promote recycling, without loading costs onto councils.
  • Protect and grow green and blue infrastructure. Give Local Nature Recovery Strategies the teeth to shape all public environment spending in places, and review powers they hold to lead nature-based adaptation action, from managing floods to droughts.
  • Jobs, workforce, supply chains. Enable councils to help build local supply chains by establishing national policy certainty for green sectors, and link skills and employment services to develop the workforce needed to deliver local climate action across the economy.
  • Public spending to attract private investment. Provide long-term core funding certainty to councils’ local climate action and wider place-based allocations to achieve outcomes with a focus on developing programmes that enable private and blended finance models.
  • Local climate action test. Pass all government policy and funding decisions – for instance on planning, housing, waste, transport – through a test to provide a check that it does not undermine local climate action.

Third, translate missions to reality through Local Climate Action Plans covering all areas. Each would likely be unique, but in following a standard framework, should all:

  • Accelerate local climate action agreed by central and local government in each area, incrementally building on existing experience and strengths in places.
  • Provide multi-year place-based funding allocations underpinning action, with certainty for longer-term and exploration of fiscal freedoms.
  • Agree ambitious but deliverable outcomes, with a focus on maximising impact and flexibility for councils in how they are met.
  • Develop every council’s own capability and capability to lead action across all issues, while taking opportunities build economies of scale around some skills/technical assistance.
  • Aggregate projects into programmes to pool resources, skills and technical assistance, and commit to build scale in seeking to attract private investment.
  • Enter a process of regular review, refunding, and adaptation at every spending review up to 2050.

The choices made today will reverberate for hundreds of years. Councils are ready to play their full role in leading local climate action to hit net zero and adapt to change.

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Fulfilling the purpose of local government: funding and reform

Our priorities for resetting the relationship with national government 

Local government can make a big difference more efficiently. We are best placed to make the biggest and fastest difference to the prosperity and wellbeing of citizens, both as providers and convenors of key public services, and as place leaders who hold the keys to local inclusive economic growth and community wellbeing.

Addressing these challenges requires a fundamental reset of the relationship between local and national government. We would like the next government to commit to our priorities to drive inclusive growth and ensure future sustainability. Our focus is on: 

  • An equal, respectful partnership between local and national government
  • Sufficient and sustainable funding.
  • Backing local government as place leaders.
  • A new focus on prevention and services for the wider community.
  • Innovation and freedom from bureaucracy.

1) An equal, respectful partnership between local and national government 

It is time for a new, equal and respectful partnership between local and national government, drawing on the best international practice. We are an outlier in the OECD, heavily reliant on national decisions for funding and powers. As a result, at a time when people are struggling to afford the basics, millions of pounds of taxpayers’ money is spent by local government to chase down new sources of investment from Whitehall. If we are to meet the challenges of the coming decade, we need a joined-up and strengthened system of governance that has a sharper focus on outcomes for the people we serve.

To ensure this partnership has genuine resilience we want to work with government to explore the codification of the Council of Europe’s Charter of Local Self-Government – which sets out basic rules guaranteeing the political, administrative and financial independence of local authorities and has been ratified by 46 states across Europe. While the UK is generally compliant; the autonomy of our local councils is not protected (Article 2) and neither is their ability to receive adequate financial support for the services they provide (Article 9). Enshrining these principles in statute would strengthen the place-leadership credentials of local government and bring decentralisation much closer into line with the experience of our international peer group.

We want to work with government to create a non-bureaucratic and agile forum for local and national government to discuss forthcoming legislation, aggregate expenditure levels and emerging areas of joint priority. This would ensure local government is able to bring its frontline expertise and experience to the heart of national policy development, drawing on the experience of systems which do this well, such as the Danish Annual Framework Agreement.

Local councillors are the life blood of local democracy, but 7 in 10 councillors reported experiencing abuse or intimidation in the 2022. We recognise this is national challenge and we are calling for a joint campaign for respect in public life to ensure best use of resources and cement the sense that local and national leaders stand together in democratic debate free from abuse and hatred.

2) Sufficient and sustainable funding

Current and future demand

Cost and demand pressures are rising faster than funding. To meet these pressures and enact reform, councils need a significant and sustained increase in overall funding that reflects current and future demands for services. This has the potential to reduce costs falling on other public services and to support the more efficient delivery of key government agendas such as economic growth and increased housing supply. Ensuring local government is financially stable is also fundamental to any government being able to deliver its wider policy objectives.

Councils need a significant and sustained increase in overall funding that reflects current and future demands for services.

Longer-term financial planning

However, this is not just about local government having enough money to provide services in line with current and future demand. The potential to deliver maximum value for money is held back by financial uncertainty and a limited ability to plan for the future. Councils may end up planning on the assumption that they will have less funding available to them than is the case, needlessly scaling back non-statutory services and making redundancies. 

A single-year planning horizon is an obstacle to councils to making innovative and meaningful decisions, limits their ability to focus on long term strategic and economic planning and undermines their financial sustainability. Councils need multi-year and timely finance settlements, and greater certainty over financial reforms, to enable them to plan ahead and make meaningful financial decisions. 

A clearer, fairer funding system

The current system of funding local government is out of date, opaque, overly complex, and limits the ability of councils to be more self-sufficient by raising income from other sources. The system needs reform urgently.

The LGA, will be producing a paper on reform of the local government finance system later in 2024. This will set out how a new government can put local government on a more financially sustainable footing, make recommendations for short-term actions that can be taken to improve the local government finance system and call for a cross-party review of, and debate on, options to improve the local government finance system. 

This is likely to include a focus on:

  • Providing sufficient funding and greater certainty for local government through multi-year and timely settlements.
  • Updating the formulas and the underlying data used for the assessment of relative needs and resources. Transitional mechanisms should provide sufficient funding to ensure that no council experiences a loss of income in the move to a new system for assessing relative needs and resources.
  • Reform of and freedoms and flexibilities over council tax, business rates and sales, fees and charges.
  • Assignment to local areas of a proportion of nationally-collected taxes paid by citizens in a given area. It would be for local politicians in partnership with local providers to decide on priorities and the allocation of funding.
  • Freedom to collect different taxes in different ways to support local priorities, or introduce new local levies, such as a tourism tax, an e-commerce levy, and the power to introduce a workplace parking levy.

The LGA is also considering how pension funds can be harnessed to enable local investment.

Bold and creative action will be needed on finance to ensure that local government is placed on a sustainable footing for the future.

3) Backing local government as place leaders

We are the democratically elected leaders of local places, and uniquely positioned to bring agencies together around the needs of residents. You cannot build a safe and thriving high-street from a desk in Whitehall and you cannot tackle multi-generational health and income inequality through departmental silos. We know too that the hollowing out of councils’ ability to regulate local educational and children’s care provision is leading to higher costs and more challenging outcomes. 

To fully unlock the potential of people and places we need a new conversation between national and local government about how funding for one place can be combined, rather than being divided into different pots, in order to improve outcomes and drive efficiency. This should  apply the lessons of successful approaches, such as Total Place and Whole Place Community Budgets to the challenges of the coming decade. To support this, we need a radically improved approach to collecting and sharing data so that the interactions between different public services, expenditure and outcomes are mapped and aligned. This will ensure services are designed in partnership to meet the needs of communities, not organisational silos.

The devolution framework and the renewed push towards further and deeper devolution deals across the country is welcome, but still falls short of our ambitions for genuine devolution underpinned by local government’s pre-eminent place-shaping role. 

To help build thriving local economies where people want to live and work and where employers want to invest, we need a coherent, locally led employment and skills offer attuned to the challenges and opportunities of people and place. The gains to be had from a fully devolved and integrated Work Local model are considerable, delivering better outcomes for our residents, communities and employers. 

A more integrated approach where local government is empowered to lead work with schools and other providers would enable councils to better meet the needs of young people, especially those with SEND or who are in social care.

A strong partnership between NHS Integrated Care Systems and locally elected leaders is also fundamental to improving the health and wellbeing of local communities. We want to see a mandatory requirement on Integrated Care Boards to involve elected local leaders in resource allocation and commissioning decisions, and ensure decisions reflect the mandate of local communities.

We need a coherent, locally led employment and skills offer attuned to the challenges and opportunities of people and place.

4) A new focus on prevention and wider services for the community

A preventative approach is essential to deliver the best outcomes for people, and to avoid spending more later when people’s needs escalate. The NHS Confederation rightly argue that the next government must enable local health systems to proportionately increase investment upstream into community-based services, mental health and social care. 

As a nation, we waste public money by not providing the right support at the right time. The Early Intervention Foundation estimated the costs of late intervention for children and young people total £17 billion a year across public services. There is clear evidence that targeted intervention from the early years, and before birth, works in delivering much improved life outcomes for children at risk[17].

Vibrant local economies depend on a healthy, skilled and well-educated workforce. Ill-health, not just among older workers but among younger ones as well, is increasingly putting a brake on local economies. This reflects decades of underinvestment in prevention and rising mental health problems. 

Preventive services investing in the wellbeing of whole communities, including culture, sport and open spaces, have been cut disproportionately. It is only by tilting the balance towards prevention that better outcomes for people and more sustainable public services can be delivered. LGA research in 2015 demonstrated how local authority prevention work can deliver strong return on investment over a 5-year period. 

Preventive services need to form part of overall service design for local communities, adopting person-centred approaches across the age range. 

A comprehensive approach includes: 

  • Targeted support from the early years, and before birth, for children and young people at risk, with effective, sustainable support for children and young people with SEND.
  • Prevention of criminality, the biggest driver of costs to the public purse, and anti-social behaviour through effective youth services and better support for young people at risk.
  • Public health interventions, which are well-evidenced to prevent ill-health, support a healthy, productive workforce, and significantly reduce future health and social care costs.
  • Prevention in housing, homelessness and supported housing services, to avoid the serious health impacts of poor-quality housing, and the very high costs associated with temporary accommodation and emergency service access by rough sleepers.
  • Support for financial hardship and debt, enabling people to meet their essential living costs and alleviating the stress and social exclusion that accompany poverty.
  • Culture and sports activities, which promote good physical and mental health, community cohesion and resilience, and support a healthy workforce.
  • Adult social care, where the right community support at the right time can prevent the need for intensive and expensive intervention at the point of crisis.
  • Asset management, with preventive maintenance before longer-term costs mount.

Despite financial pressures, local government continues to invest and innovate in their prevention work across the country, ranging from Doncaster Council pioneering community-based approaches to mental health in a former mining town to person-centred approaches to homelessness prevention in Leeds and Cornwall that have reduced pressure on temporary accommodation.    

It is time to pivot towards prevention, investing in healthy communities and a healthy workforce to make public money go further. We want to see as a first step immediate implementation of the Hewitt report recommendation that the share of total NHS budgets at ICS level going towards prevention increase by at least 1 per cent over the next five years.

5) Innovation and freedom from bureaucracy 

Local government is constantly innovating, developing new solutions to some of the biggest challenges facing citizens and their communities. We share insights and learning so that, rather than ‘reinventing the wheel’, local government moves cost-effectively and at pace.

We work together to enable local authorities to address the biggest challenges facing the sector. Peers with ‘real-world’ experience support performance improvement at lower cost than intervention by regulators and government.

While we respond rapidly as new challenges arise and continue to focus on delivering efficiencies and transforming services, there are many blockers that get in the way or add cost – further limiting the resources available to meet local needs.

Government research has shown that organisational barriers across different government departments when working with local government result in a lack of coordination, duplication of efforts and missed opportunities for collaboration. 

Local government brings together all partners in their local place to work on tackling the most difficult issues, but multiple funding and commissioning processes result in duplicated and complex funding flows, requiring significant time and resources for councils and their partners to meet reporting requirements. Barriers to data sharing get in the way of multi-agency working and local coordination.

There are currently many inspectors and regulators of local government services: they – and the central government departments they relate to – largely work in an uncoordinated way. This adds to the burdens on councils which are already working to address significant challenges. 

We are calling for:

  • Better learning from inspections: we will work with the relevant inspectors and regulators to identify common themes, share learning and minimise duplication.
  • Action on unnecessary burdens and barriers: we will work with government to remove reporting that doesn’t add value and develop new, more efficient ways of working with central government. 
  • Development of a complete picture of the local spend of all public sector organisations and the aims of that spend: working with government to achieve this will help our work with local partners to target resources for the benefit of local communities.
  • A Local Government Centre for Digital Technology: using technological innovation to deliver reform and promote inclusive economic growth across councils.

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Working together for change

Local government is committed to the reform of public services to meet the needs of local communities. We have so much to offer. As budgets have tightened, we have been at the forefront of innovation, co-location of services and collaboration with local partners.  

The priorities we have set out will reset our relationship with national government. They will enable us to contribute substantially to longer-term productivity, prosperity and public service reform. 

We must be honest that we face some extremely difficult challenges and choices. The universal nature of local services is under severe threat as budgets are more and more crowded out by essential statutory services for a relatively small proportion of the community. The fiscal environment is expected to remain tight, and there are not immediate sources of additional local funding.  

Yet the local government sector remains strong and optimistic. We know that we have the expertise to transform local services in the most challenging of environments. 

We need a national – and honest – debate about the huge gap between what local communities need and want, and what local government is currently funded to deliver. We need to ask some fundamental questions about what is expected from local government.  

The local government sector remains strong and optimistic. We know that we have the expertise to transform local services in the most challenging of environments. 

Local government is often seen as a universal safety net for local communities. This is relied upon in times of crisis nationally, and by individuals and families who are at crisis point. Yet too often local government is not valued or funded in a way that enables us to deliver effectively to meet these important expectations. 

National government should be paying for the safety net it wants to see delivered locally. But this is not happening. The fundamental challenge facing the sector is that cost and demand pressures are rising faster than funding. Our analysis shows that by 2024/25 these pressures will have added £15 billion (28.6 per cent) to the cost of delivering council services since 2021/22.  

We need an honest and open dialogue about what this safety net looks like in the future. But we also need to look beyond this by considering more radical changes, which will be needed to really tackle the long-term systemic changes facing our communities. 

Some fundamental questions need to be addressed: 

  • There is a clear mismatch between the funding available to local government and what we are expected to deliver. The funding envelope needs to meet statutory duties. This is a basic requirement for the sector to be able to function. There are some statutory services, such as waste, where councils would welcome a more flexible approach to service delivery which could help with funding issues. Furthermore, during our consultation many chief executives said they consider many of the non-statutory services they provide, such as parks, as central to helping manage people’s needs.
  • Some issues may need radical policy reform in order to manage rising demand. Some services are seeing significant increases in demand and cost of delivery. Adult social care, temporary accommodation, asylum, SEND and home-to-school transport are all issues which require complex solutions and ambitious reform. Well-intentioned reforms have not been fully funded and have not adequately tackled escalating costs. The combination of rising demand and costs means that local councils can no longer provide short-term solutions to these issues. We may also need to ask ourselves a difficult question: do the national assessment criteria for some services need changing, to deliver fairer access to services in the future?
  • We need to maximise the value of place. Place-making services are getting squeezed out due to the focus on demand led statutory services. What will this mean for climate change, leisure, culture and other services which create a sense of place? We need to accept that we will need more variation not less if we are to maximise value in different places. This will mean enabling councils to deliver on inclusive growth via meaningful devolution giving a greater steer over local skills, health, housing and transport. Are future governments committed to this place-based approach?  
  • We must invest to save: We need an open conversation about what this really means for the sector. Can councils come with plans to invest in prevention which may have outcomes that only deliver over a long-term period? Will there be the ability to raise funding in different ways, for example through pension funds? How much risk is the sector expected to take? We need to work together to develop a compelling evidence base to guide national and local investment decisions. 
  • It is also critically important that we can keep local government talent. Since 2020, the National Living Wage has increased by over 31 per cent (£2.72 per hour). The lowest rate of pay in local government has increased by 25 per cent (£2.34 per hour). This has come at significant cost to employers, and in 2022 the National Employers wrote to government highlighting that the pay award was not affordable and the national policy on the NLW needed to be supported by funding to local government employers to meet its demands. This is crucial going forward. Local government does not want to be a minimal wage employer. Without government commitment to support local government with NLW costs, councils are unable to recruit front line staff or retain experienced staff who are tempted by jobs with less stress and more pay in other sectors. 

Collaboration between central and local government on creative solutions to the most difficult challenges will be essential. We therefore call for a central-local partnership to oversee the delivery of our recommendations and to oversee the reforms needed to deliver a new purpose for local communities across the country.  

To support a new national dialogue on these issues, we want to work with the next government on three workstreams which can take this thinking forward early in the new Parliament, to establish a long-term plan for change:  

  • New equal and respectful central-local partnership: the next government should establish a new partnership model for working with local government and delivering the recommendations set out in this paper. We will support this by creating a representative group from local government to engage in this partnership, agree a new approach to devolution with central government and combined authorities and drive forward reforms.
  • A review of place-based public service reform: the next government should commission a major new review of how public services can work together to transform across a place, including through invest to save models of prevention. We will support this by providing insights from the experience of local government and ideas for reform.
  • Further improving cost-effectiveness and innovation: the next government should actively support councils to further improve efficiency and draw on innovative best practice by creating a taskforce which can bring together and share this, and ensure it is supported in central government policymaking. We will support this by helping to manage the taskforce and encouraging councils to adopt its proposals. 

National and local government need to come together to find solutions to our biggest challenges. And for those issues which cannot be fixed nationally, local government leaders of each place must be empowered to make the best possible decisions for that place, in partnership with other local leaders.  

Local government stands ready with all its experience and expertise to act as equal partners in finding solutions to these intractable long-term problems. 

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Next steps

The LGA will be undertaking a significant programme of work to take forward the ideas in this White Paper.

Our focus will continue to be on the issues we have outlined are the biggest challenges for now and into the future. We will be publishing new pieces of research and establishing cross-sector working groups to focus on the longer-term solutions.

Ahead of the General Election, we will be talking to all the major political parties about resetting the relationship between local and national government and the offers we can make to work together with the next government to take forward a new sustainable future for public services, and support inclusive economic growth. We want the next government to be able to drive partnership action to start tackling the immediate challenges right away.

We will also be setting out 100 specific actions based on the direction of travel set out in this paper to progress this in the first days of the new Parliament.

Working in this new way will build firm foundations for longer-term reform and the renewal of local government for the benefit of local people. 

We look forward to working in a new partnership between central and local government to support local communities and economies to flourish. 

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[1] Jong d et al (2021) A comprehensive approach to understanding urban productivity effects of local governments: Local autonomy, government quality and fragmentation, OECD.

[12] Reablement typically refers to short-term support that helps people re-learn daily skills for an independent lifestyle. It helps people retain or regain the skills and confidence to live at home after a period of illness.