 A significant reduction in government funding
We have received our worst government funding deal ever and are facing the loss of more than £40 million in financial support over the next three years.
Despite calls for a better deal backed by thousands of residents, the provisional Local Government Finance Settlement 2026–29, which sets out how much financial support councils receive, means a stark reduction in our funding. This will have an immense impact on the council’s position.
The provisional settlement is for three years and will get worse for us during that period. Next year, our government (non-Council Tax) funding will reduce by 17.8 percent (a reduction of about £6.6 million). By the third year of the settlement, we will have lost £43.6 million of government funding in total.
The settlement comes after the government consulted on changes to how local councils are funded (the Fair Funding Review 2.0). We used the consultation to call for a minimum annual increase of four per cent for all councils with adults and children’s services responsibilities, protecting those worst affected and to be fairer. More than 3,000 local residents backed our calls and many other councils made similar points.
But the government has not introduced this funding floor ‘safety net’ and although it made some concessions to the way it calculates funding, the overall result is largely unchanged for us.
Full details are set out in the Chief Finance Officer’s report in the agenda for the council’s Executive meeting on Thursday (Jan 15).
Why we receive less funding than other councils
We have the lowest level of core government funding (Core Spending Power excluding Council Tax) in England.
To put this into context, Blackpool City Council gets six times the funding per head that we receive (£168 compared to £1,050 per head). If we received funding in line with Blackpool we would have an extra £160 million every year and if funded at the average funding level for a unitary, a council which provides all services, we would benefit by about £71 million per year.
This is due to the way the government decides how much each council gets, which is based mainly on deprivation (areas of low income), rather than what it costs the council to meet the needs of the community.
We do not believe the Government fully takes account of our costs in some of the higher spend areas such as supporting children with special educational needs or helping adults who have physical disabilities or learning difficulties.
These are not as directly linked to deprivation and so we don’t believe they are considered properly by the government.
 What we spend money on
Our priority is supporting those people who need us most and more than two thirds of the money we have is used to look after and help people.
This includes people with learning difficulties, physical disabilities, those with mental health issues and others in our community who require support. It also includes making sure children and vulnerable adults are kept safe from harm or abuse.
We are aware these vital and legally required services are not as visible day-to-day as others, such as roads or waste collections but that does not make them any less important.
You can see a breakdown of our spending for 2025/26 on our website.
Why costs are rising
We all know that the cost of almost everything has gone up in recent years, and the things the council must pay for have been particularly badly hit by this.
Although the speed at which prices are increasing has slowed (the rate of inflation has dropped), it does not mean prices are returning to the levels they were before.
Inflation costs alone for 2026/27 are £7.6 million, alongside a further £10.4 million to respond to changing needs, new rules and increased demand across our services, with more residents needing support and needs becoming more complex.
It is right and vital that the council continues to meet these needs, but the cost of doing so makes up a large part of the additional financial pressure we face.
We know Council Tax has also been going up, but this has been necessary to help meet these rising costs. Due to the lack of government funding per head than other similar councils, we are more reliant on local taxpayers to fund services.
 What this means for you
Although we've made savings or generated increased income of more than £30.6 million in the past three years, we need to reduce spending and raise income further. This will impact on some services and what we must charge for certain things.
We will continue to make the best use of staff and technology to reduce costs but will need to change services as well. We will consult and engage with residents as we make the necessary changes to reduce impact on you.
We will set our budget for 2026/27 at a meeting of the full council on Thursday 26 February.
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