Local authorities’ ability to improve outcomes for people is undermined by an overly complex funding system, with competing policy demands and funding streams. Local authorities receive funding through the annual local government finance settlement, which includes formula-based grants and locally retained business rates. They can also raise income locally through council tax, and other local charges. Government has committed to a return to multi-year finance settlements from 2026–27, the first in a decade, which will provide local authorities with more certainty and ability to plan and invest, to achieve greater efficiency. Estimates suggest that 4 there are still several hundred unique grants available to local government from central government departments outside of the finance settlement. These are often small and ring fenced for a specific purpose, but the administrative work involved for local authorities can be considerable. In the past, government has not had a grip on how many of these grants existed, but it is now working with HM Treasury to consolidate grants to provide better value for money and flexibility to meet the needs of people. Many departments rely on local authorities to deliver policy initiatives, although lack of joined-up working can result in competing policy demands. We understand that as part of the upcoming spending review government is encouraging join-up between departments to help deliver the government missions. RECOMMENDATION As part of the multi-year funding settlement in autumn 2025, MHCLG must work with other departments to implement its plan to simplify funding across the system, including the consolidation of cross- government grant funding to local authorities.