In a representation submitted to government, the Institute said that separate funding streams for local public services, such as adult social care, would enable regional sharing of welfare costs and provide residents with greater transparency on how their council tax is being spent.

ICAEW also urged the government to retain Level 7 apprenticeship funding, arguing that the proposed removal would be damaging for professional and technical skills in the UK economy and will likely lead to offshoring of highly skilled jobs.

Meanwhile, the introduction of rolling spending reviews every two years - each of which will cover three years of operational spending and four years of capital expenditure - will significantly improve long-term spending by allowing departments to commit to longer-term projects and multi-year supplier contracts, ICAEW said.

Additionally, the Institute recommended using planning reform to speed up construction and accelerate projects like East West rail; reviewing subsidy-dependent services such as the railways, higher education, heritage and the arts to make them more sustainable and less reliant on taxpayer funding; and investing more in prevention to address public sector issues before they escalate.

Alison Ring, ICAEW Director, Public Sector and Taxation, said:

“Reforms to the way key public services like adult social care are funded would give council taxpayers more transparency about how money is spent and enable a more equitable sharing of money across regions, and we urge the government to make these changes.

“Rising demand for social care, homelessness support and special education needs are putting significant pressure on council budgets, and in many areas, there is a stark mismatch between resources and demand. Successive governments have pushed reform of local government funding in England into the long grass for too long, and these changes are long overdue.”

ENDS

Notes to editors:

1. Read our full submission: ICAEW REP 16/25 Spending Review 2025.
2. ICAEW’s chart of the week: the end of year capital rush highlights some of the issues in how capital expenditure is managed in the UK public sector.