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Funding package for councils proposed by Government ‘too little, too late’ says LGIU

A funding package worth over £64 billion to for councils in England to deliver frontline services has been announced today (Monday 18th December) by the Levelling Up Secretary.

The provisional local government finance settlement makes available almost £4 billion more funding for councils in England in 2024-25, an increase of 6.5% on 2023-24 – an above-inflation rise in recognition of the pressures being faced by local authorities.

The Funding Guarantee introduced last year will be maintained to ensure every council in England sees at least a 3% increase in Core Spending Power before any local decisions are made around council tax. This decision has been taken in recognition of the pressures being faced by local authorities despite the recent drop in inflation.

And to continue to support councils providing essential adult and children’s social care services, we are making available £1 billion in additional grant funding for social care in 2024-25 compared to 2023-24.

Councils will be able to increase council tax by up to 3% without a local referendum with a further 2% for those responsible for adult social care services, with additional flexibilities for some authorities. It is for councils to determine council tax levels, but they should always be mindful of cost-of-living pressures when making any decisions.

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The government has already been clear it does not support any attempt from a local authority to implement Part-Time Work for Full-Time pay – the so-called ‘four-day week’ or equivalent arrangements. South Cambridgeshire District Council was issued with a Best Value Notice on November 3, after repeated requests for the authority to end its trial, as a result of concerns the practice could impact on its Best Value Duty.

The government is now inviting views on proposals to use financial levers within future settlements occurring after 2024-25 to stop this practice.

Jonathan Carr-West, Chief Executive, Local Government Information Unit ( LGIU ), said:

“This year’s provisional financial settlement does not address the severe problems at the heart of local government finance and is simply too little, too late.

“There is little confidence across the sector in local governments’ financial resilience. In March this year, only 14% of senior council figures said they were confident in the sustainability of local government finances. Since then, three more councils have announced their effective bankruptcy.

“The key problem is not the scale of annual financial settlements – although that can make any given year harder or easier for councils to manage. The key issue is with the long-term resilience of the sector. Only 6.25% of senior council figures were happy with the progress that had been made by central government on delivering a sustainable funding system.

“This settlement does not address these concerns. The severe systemic problems faced across English local government can only be addressed through multi-year financial settlements based on need, more fiscal flexibility for councils in both how they raise and spend money, and most crucially of all – engagement between central and local government as equal partners dedicated to delivering essential services.”

“A system where local governments only find out how much money they have for a year, without significant consultation, and with limited capacity to change their own financial position, can never succeed in meeting the long-term needs of the sector.”

Levelling Up Secretary Michael Gove said:

“Councils are the backbone of their communities and carry out tremendous work every day in delivering vital services to the people they serve.”

“We recognise they are facing challenges and that is why we have announced a £64 billion funding package to ensure they can continue making a difference, including through our combined efforts to level up.”

Minister for Local Government Simon Hoare said:

“It is good news for our local government sector that we are presenting an above-inflation increase in funding.

“We are, and will, continue to work alongside councils to ensure quality and reliable services are provided to those who need and use them, while also keeping a weather eye on ensuring value for the taxpayer.”

The provisional local government finance settlement includes:

  • A substantial total funding package for councils worth more than £64.1 billion for the next financial year – an increase of £3.9 billion or 6.5% in Core Spending Power compared 2023-2024.
  • The most relatively deprived areas of England will receive 18% more per dwelling in available resource through this settlement than the least deprived areas.
  • A real-terms funding boost across England. Local government has seen a real terms increase in the funding available through local government finance settlements over the period since 2019.
  • Support for social care. We are providing £1 billion in additional grant funding for social care compared to 2023-2024.
  • An extension to the Funding Guarantee to ensure every council sees at least a 3% increase in Core Spending Power before any council tax decisions locally.
  • Stability for councils by maintaining our approach to other grants, such as continuing to increase the Revenue Support Grant in line with the Consumer Price Index.
  • The consultation on the provisional settlement will be open for 4 weeks, closing on 15 January 2024.

The government will provide confirmation of the final local government finance settlement once the consultation has closed and all responses have been considered in early 2024.

This provisional settlement follows the decision at Autumn Statement that the Local Housing Allowance will be uprated to cover the 30th percentile from Spring next year, and the announcement that there will be a Round 3 of the Local Authority Housing Fund, worth £450 million, to help support pressures from temporary accommodation and Afghan resettlement arrivals.

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