Policy paper

Annex B - methodology for calculating local authority notional funding allocations for adult social care

Published 18 December 2025

Applies to England

How we will calculate local authority notional allocations

The Ministry of Housing, Communities and Local Government’s (MHCLG) provisional local government finance settlement for England: 2026 to 2029 sets out the breakdown of local government funding available for adult social care. This publication sets out how we will calculate individual local authority notional allocations.

We are providing the methodology for calculating notional allocations now, so that local authorities understand how notional allocations will be calculated, and what they will represent, ahead of publication of the figures themselves.

While these will not be formal spend expectations, notional allocations will provide an illustration of the change in adult social care spending in each local authority, assuming adult social care spend reflected wider changes in overall available funding.

Broadly, we will calculate each local authority’s notional allocation by:

• using their reported current spending on adult social care as the starting position
• illustrating how spending on adult social care might be expected to change by 2028 to 2029, should adult social care spend grow in line with wider changes to local authorities’ core spending power (CSP)

Local authority notional allocations will only include local government funding available for adult social care. While the NHS minimum contribution to adult social care through the Better Care Fund (BCF) will also support delivery of adult social care services and is part of the around £4.6 billion additional funding available for adult social care in 2028 to 2029 (compared with 2025 to 2026), it will not be included as part of each local authority’s notional allocation for adult social care. This is because this funding is distributed by integrated care boards or health and wellbeing boards and will not necessarily be spent by local authorities.

Given that notional allocations will not be ring-fences but instead a tool to inform local authority decision-making, the methodology for calculating the growth in notional allocations has been kept deliberately straightforward. Adult social care shares of CSP for upper-tier local authorities will reflect national averages rather than the varied structural characteristics of local authorities.

We recognise that adult social care expenditure at a local authority level will be influenced by many local factors and may differ from these notional allocations.

Methodology

Step 1: local expenditure baseline for each local authority

Our intention is for notional allocations to reflect local authorities’ current expenditure on adult social care as far as possible. Ideally, we would use outturn expenditure for 2025 to 2026 as the baseline. In the absence of local authority revenue expenditure and financing data to indicate total adult social care spending in 2025 to 2026, we will estimate baseline spending using available data for local authority budgeted spend on adult social care in 2025 to 2026. Where 2025 to 2026 data is unavailable, we will use available data for local authority outturn expenditure on adult social care in 2024 to 2025.

Local authorities with missing data for 2025 to 2026 and 2024 to 2025 will be shown as missing.

We recognise that using budgeted spend is an imperfect estimate of eventual outturn spending. We will therefore update the baseline for all local authorities’ notional allocations with 2025 to 2026 revenue outturn data (which details local authorities’ actual spend on adult social care and other services) once it becomes available in autumn 2026.

Step 2: calculate additional funding available for adult social care through increases in overall CSP

For each local authority, we will calculate the change in its CSP above the 2025 to 2026 baseline. We will exclude:

• the Homelessness, Rough Sleeping and Domestic Abuse Grant
• Families First Partnership Programme funding
• transition funding
• £900 million of Revenue Support Grant funding distributed using the adult social care relative needs formula

The adult social care share of CSP for upper-tier local authorities at a national level will then be applied to this change in CSP for each upper-tier local authority. This produces the change in the funding available for adult social care from overall changes in CSP.

This adult social care share of CSP for upper-tier local authorities at a national level will be calculated by adjusting the adult social care control total (37.24%) to reflect upper-tier local authorities only.

Note that the adult social care control total reflects the adult social care share of CSP for all of local government and so includes authorities without adult social care responsibilities.

Step 3: add profile for £900 million of Revenue Support Grant funding distributed through the adult social care needs formula and share of transition funding to each local authority’s figure

To reach the overall notional allocation for each local authority, we will add the following to each local authority’s 2025 to 2026 expenditure baseline:

• £900 million of Revenue Support Grant funding distributed using the adult social care relative needs formula across the multi-year settlement
• transition funding available for adult social care as defined by MHCLG’s explanatory note on the additional funding available for adult social care control
• the general increase in CSP for each local authority, as set out in step 2 above

Step 4: apply 6.3% minimum increase for some local authorities

While the vast majority of local authorities will see increases in their notional allocations by 2028 to 2029, there are some local authorities whose CSP will grow by less than inflation over the multi-year settlement.

Local authorities’ adult social care expenditure over the multi-year settlement will need to change to reflect changes in adult social care costs and demand. It is likely that, as a minimum, expenditure will need to increase in real terms.

Where a local authority’s CSP is growing by less than inflation over the multi-year settlement, its notional allocation will be set to grow in line with inflation (inflation is expected to be 6.3% between 2026 to 2027 and 2028 to 2029).

We will use this methodology to calculate annual notional allocations for each local authority, covering the 3-year period starting in 2026 to 2027 and ending in 2028 to 2029. These will be published in early 2026.

Notional allocations will not be ringfences. We recognise that a number of local factors will influence local authority budget setting and will work with councils to understand their decision making. The measure of CSP used in the calculation of notional allocations is un-ringfenced (other than the minimum NHS contribution to adult social care through the Better Care Fund and local authority contributions through the Local Authority Better Care Grant). It is for councils to decide how best to use un-ringfenced income to fund local services.