Council capital spending in England falls 2.9% in real terms to £31.7bn in 2025-26
Final figures for 2025-26 show councils spent £11.1bn on housing projects and £8.1bn on roads and transport, with capital grants paying for £15.2bn of the work.
By Daily Oracles News Team2 min read
English councils spent £31.7bn in 2025-26 on buying, building and improving assets such as buildings, land, vehicles, streetlights and road signs, according to final figures from the Ministry of Housing, Communities and Local Government. After adjusting for inflation, that was £958m, or 2.9%, less than in 2024-25.
All 413 local authorities in England returned figures. Comparisons are in 2025-26 prices.
Where the money went
Housing remained the largest single area of spending at £11.1bn, up £336m or 3.1% on the year, and now makes up 35.1% of the total. Its share has grown by 7.2 percentage points over five years.
Highways and transport was second at £8.1bn, a fall of 5.3%. Most of that drop came from lower spending by the Greater London Authority, which still spent more on roads and transport than any other single authority, at £1.5bn. Spending on trading services such as markets, civic halls and industrial estates fell 21.6% to £856m.
By type of spending, £26.1bn went on physical and intangible assets, down 1.5%, including £20.5bn on new construction, conversion and renovation. Financial spending, mainly grants and loans to other bodies for capital purposes, came to £5.6bn, down 8.9%.
How it was paid for
Grants from government and other bodies paid for £15.2bn of the work, a real-terms rise of £1.5bn or 10.7%. Prudential borrowing, which councils can take on within affordability limits, was broadly stable at £11.1bn. Councils also raised £4.7bn from selling assets, up 8.8%.
Spending on day-to-day costs that the government allowed some councils to treat as capital, through a direction under the Local Government Act 2003, rose to £1.3bn, the highest in the last five years. The release notes that several authorities have been granted exceptional financial support since 2020-21, though not all of them may have used it.
Lease accounting is raising debt figures
Since 2024-25 councils have been required to apply the IFRS 16 standard, which brings most leases onto the balance sheet. That raises recorded debt and the underlying need to borrow without any extra capital spending in the year, and it increases the minimum revenue provision, the amount councils must set aside each year from their revenue budgets to repay debt.
The final total is £585m lower than the provisional figure published in June. The biggest revision came in highways and transport, mainly because the Greater London Authority's final figure was about £1.3bn lower than its provisional one.
