Council capital spending in England fell 2.9% to £31.7bn in 2025-26, final outturn shows

Local authorities in England spent £31.7bn on capital projects in 2025-26, a real-terms fall of £958m (2.9%) on the previous year, according to final outturn statistics published by the Ministry of Housing, Communities and Local Government (MHCLG) on 12 November.

The figure is £585m (1.8%) lower than the £32.1bn provisional outturn MHCLG reported in June, and it turns a provisional £514m (2%) annual decline into a steeper one. The accredited official statistics are drawn from capital outturn returns submitted by all 413 local authorities in England.

Spending on fixed assets totalled £26.1bn, down £407m (1.5%) in real terms. MHCLG said the decline was largely due to a £316m (1.5%) fall in New Construction, Conversion and Renovation, which totalled £20.5bn. Total financial expenditure, the non-fixed-asset element of capital spending, fell £550m (8.9%) to £5.6bn.

Where the money went

Housing remained the largest service area at £11.1bn, or 35.1% of all capital expenditure, with Highways & Transport second at £8.1bn (25.5%).

Highways & Transport spending fell by £449m in real terms, which MHCLG said was largely driven by a £347m (18.7%) decrease at the Greater London Authority (GLA). Trading Services spending fell £236m (21.6%) to £856m.

Service area (2025-26)	Capital expenditure
Housing	£11.1bn
Highways & Transport	£8.1bn
Education	£2,306m
Central Services	£2,152m
Planning & Development Services	£2,144m
Culture & Related Services	£1,805m
Environmental & Regulatory Services	£1,336m
Trading Services	£856m

Figures are in real terms at 2025-26 prices, adjusted using HM Treasury's GDP deflators at market prices, according to MHCLG's technical note.

Large swings since June

The gap between the provisional and final figures is concentrated in a few areas. Highways & Transport spending fell by £1.26bn between the two releases, mainly because the GLA's final figure was about £1.3bn below its provisional return. The June release had reported Highways & Transport up £819m (10%), driven by a £977m rise at the GLA; the final outturn reverses that into a decline.

Capital receipts moved the other way. The provisional release put them at £3.9bn, £485m (11%) lower than 2024-25. The final outturn puts them at £4.7bn, an increase of £382m (8.8%) on the year and £840m (21.5%) higher than the provisional figure. Trading Services expenditure was revised up by £254m (42.2%).

MHCLG also said 2024-25 outturn figures have been revised since the previous publication to reflect late or resubmitted returns. The 2024-25 final outturn, released on 6 November 2025, had reported spending of £31.6bn in that release's prices, up £725m (2.4%) in real terms on 2023-24.

Financing

Capital grants were the largest source of financing at £15.2bn, up £1.5bn (10.7%) in real terms on 2024-25. Prudential borrowing was the second largest source, which MHCLG described as broadly stable at £11.1bn.

The prudential system is the informal name for the borrowing regime introduced on 1 April 2004 under Part 1 of the Local Government Act 2003, according to the technical note. MHCLG noted that since 2024-25 authorities have applied IFRS 16 Leases, which increases their Capital Financing Requirement and total external debt in the returns without a matching rise in in-year capital spending.

Exceptional financial support

Expenditure treated as capital under a Section 16(2)(b) Direction rose to £1.3bn in 2025-26, the highest level in the last five years. The previous year's figure of £1bn had itself been described as a five-year high in the 2024-25 release.

Section 16(2)(b) of the Local Government Act 2003 allows the Secretary of State by direction to provide that expenditure of a particular local authority is treated as capital expenditure. MHCLG's release defines such spending as expenditure which does not fall within the definition of capital purposes but is treated as capital, and says that since 2020-21 several authorities have been granted exceptional financial support, though not all may have used it or used the full amount.

What happens next

The June provisional release carried local authorities' own forecast for the current year. Councils expect total capital expenditure of £32.8bn in 2026-27, with Housing remaining the largest service area at £11.3bn, or 34% of the total.

MHCLG's collection page brings together the full series of provisional outturns, final outturns and individual authority data back to 2000.