Initial spending plans for councils in England are out for consultation
The provisional local government finance settlement – the annual determination of funding to local from central government in England – was published just before Christmas.
The figures indicate that councils’ core spending power will rise by an average 9.2 per cent in 2023/24.
This will help with inflationary and other cost pressures, but many councils will still struggle to set budgets and protect services, the LGA has warned.
District councils will see a lower increase, and the LGA has called on the Government to address this in the final settlement, expected in late January or early February.
Moreover, the increase is based on the assumption that councils will raise their council tax by the maximum permitted without a referendum.
This leaves councils facing the tough choice about whether to increase council tax bills to bring in desperately needed funding, at a time when they are acutely aware of the significant burden that could place on some households during a cost-of-living crisis.
The LGA is pleased that the Government will provide extra funding for adult social care and has accepted our ask for funding allocated towards reforms to still be available to address inflationary pressures for both councils and social care providers.
Councils have always supported the principle of adult social care reforms and want to deliver them effectively, but have warned that underfunded reforms would have exacerbated significant ongoing financial and workforce pressures.
There is also additional funding to help tackle the most immediate budget pressures in children’s social care, but it is not sufficient to invest in the preventative and early help services that children and families need, nor in the children’s workforce or the additional homes we need for children in care.
The Government’s forthcoming response to the Independent Review of Children’s Social Care will need to provide clarity over how children’s social care services will be sufficiently funded going forward, to enable all children to receive the care and support they need, when they need it.
We also require an urgent response to the special educational needs and disabilities (SEND) Green Paper, setting out policy reforms that will reduce pressure on councils ‘high needs’ budgets, and increase levels of mainstream inclusion.
The New Homes Bonus (NHB) makes up a considerable part of funding for some councils, particularly shire district authorities, and we welcome the confirmation of the provisional amount for 2023/24.
Councils need clarity on the future of the NHB to be able to plan their budgets beyond next year and into the medium term. Any changes should come with transitional funding to ensure that local authority services that residents rely on are not put at risk.
There are other areas on which local government awaits further clarity, such as the public health grant – which needs to be published as soon as possible – and future finance reforms.
Councils will also be aware that this is the fifth one-year settlement in a row and this continues to hamper financial planning and sustainability.
Only with adequate long-term resources, certainty and freedoms can councils deliver world-class local services for our communities, tackle the climate emergency, and level up all parts of the country.
Public health
- No information about the national total, or individual council allocations, of the public health grant.
The LGA says: “The delay to the announcement is making it extremely difficult to plan effectively at a time when public health services are vital to help mitigate pressures on the NHS and social care.”
Fire
- Fire and rescue authorities council tax precept up by up to £5.
The LGA says: “Fire and rescue services need to be funded to take account of the full range of risks, demands and cost pressures they face.”
Council tax
- Referendum limit for basic council tax rises to 3 per cent, or £5 in districts, if higher.
- Adult social care precept increases from 1 to 2 per cent.
The LGA says: “Council tax is not the solution for meeting long-term pressures facing high-demand national services such as adult social care.”
Education, SEND and early years
- Additional £1.9 billion for schools, including £400 million for ‘high needs’ funding, equating to 3.4 per cent increase in mainstream per pupil funding.
- Additional £20 million for early years to address National Living Wage increases.
The LGA says: “The Government must urgently publish the response to the SEND Green Paper, setting out policy reforms that will reduce pressure on high needs budgets.”
Business rates
- Business rates revaluation to take place in 2023.
- Business rates multiplier will be frozen for 2023/24, with local authorities compensated for loss of income.
The LGA says: “Freezing the multiplier reduces buoyancy in the business rates system, and without alternative means of funding, or compensation, means council income would reduce in the medium term.”
Social care
- Social Care Grant of £3.852 billion in 2023/24 includes £1.265 billion from delaying the rollout of charging reforms.
- Unchanged £2.14 billion through the Improved Better Care Fund.
- New £300 million Adult Social Care Discharge Grant.
- £562 million in Adult Social Care Market Sustainability and Improvement Funding, including new funding of £400 million for discharge delays etc.
The LGA says: “The additional funding to adult social care falls significantly short of the £13 billion we have called for to address the severity of the pressures facing the service.”
New Homes Bonus
- Provisional £291 million for New Homes Bonus.
The LGA says: “Councils need clarity on the future of the New Homes Bonus to be able to plan their budgets beyond next year and into the medium term.”
Funding guarantee
- All councils will see at least a 3 per cent increase in their core spending power before any decisions about efficiencies, using reserves or council tax levels.
The LGA says: “The protection this guarantee offers is positive, although this is well below the level of CPI inflation, which is currently 10.7 per cent.”
Rural Services Funding
- This year’s £85 million Rural Services Delivery Grant allocations will be rolled forward.
The LGA says: “Councils in rural areas will welcome the continuation of this funding, albeit that it is reduced in real terms.”
Finance reforms
- The Fair Funding Review and the business rates reset will not be implemented in this Spending Review period.
The LGA says: “The Government needs to ensure that overall local government funding is sufficient to ensure no council sees its funding reduce as a result of the review.”
Reserves
- Councils encouraged to consider how they can “use reserves to maintain services in the face of immediate inflationary pressures”.
The LGA says: “Reserves can only be spent once, and using reserves is not a solution to the long-term financial pressures that councils face.”
