NALC welcomes multi-year funding settlement and continued tax referendum exemption
We have strongly welcomed the government's proposals to introduce multi-year financial settlements for local government and to exempt parish and town councils from council tax referendum principles for the next three financial years.
Responding to the consultation on the Provisional Local Government Finance Settlement for 2026/27 to 2028/29, we expressed wholehearted support for the move to three-year settlements, describing it as a long-standing priority that will bring much-needed stability and certainty to local government finance.
The introduction of multi-year settlements will significantly improve financial planning for principal authorities and, in turn, enable them to develop more constructive, long-term relationships with parish and town councils. It should reduce the risk of last-minute service closures or the sudden offloading of services shortly before the start of a new financial year, a practice that has placed considerable strain on parish and town councils and communities in the past. The stability provided by the settlement is crucial during the current period of local government reorganisation, when parish and town councils are setting budgets amid uncertainty.
We also strongly welcome the government's recommendation to exempt parish and town councils from council tax referendum principles for the 2026/27 to 2028/29 financial years. We argued that councils at all levels should be able to set council tax or precept levels without the ongoing threat of government intervention. For parish and town councils, the precept is the main and often only source of income, accounting for around 2 per cent of England's total council tax in 2025/26. Unlike principal authorities, parish and town councils do not receive revenue support grant, a share of business rates, or routine access to government grant funding.
We reiterated ourcall for the government to address the long-standing inequity of double taxation in parished areas and to ensure that sufficient funding follows any local services devolved to parish and town councils, whether by agreement or otherwise. This issue is now more pressing than ever as local government structures are streamlined, and stressed the importance of simplifying and making more transparent the system of local government taxation at the local level.
We have also urged the government to allow parish and town councils access to government funding on the same basis as principal authorities. It can be achieved by amending Section 33 of the Local Government Act 2003 to give ministers the power to grant-fund parish and town councils directly. Such a change would enable parish and town councils to apply directly for government funding, secure a fair share of business rates, benefit from appropriate exemptions for community and cultural assets, and receive increased and more flexible developer levy contributions.
