February 1st 2024
Mixed response to government funding package for councils
The government has announced a last-minute £600m funding package to help deliver key services, amid fears of a wave of council bankruptcies and service failures.
The support package will primarily see an additional £500m added to the Social Care Grant to bolster social care budgets, a key cost pressure for local government.
Ministers said all councils would also see an increase in core spending power of at least four percent before any local choices on council tax, efficiencies or reserves – an increase from the three percent announced in the provisional local government funding settlement.
However, some warned that the funding doesn’t go far enough.
Levelling Up Secretary Michael Gove said: ‘We have listened to councils across England about the pressures they’re facing and have always stood ready to help those in need.
‘This additional £600m support package illustrates our commitment to local government. We are in their corner, and we support the incredible and often unsung work they do day-to-day to support people across the country.’
Shaun Davies, chair of the Local Government Association (LGA), said: ‘The LGA welcomes that the government has acted on the concerns we have raised and recognised the severe financial pressures facing councils, particularly in providing services to the most vulnerable children and adults through social care services and delivering core front-line services to communities.
‘We will continue to work with government to achieve a sustainable long term funding settlement and updated distribution mechanisms, as well as legislative reform where needed, so that local government can play its full part in delivering inclusive prosperity and growth through investment to support people, places, and the planet.’
But Sir Stephen Houghton, chair of the Special Interest Group of Municipal Authorities (SIGOMA), warned that more was needed.
‘This increase in funding is welcome and will help councils in the short-term,’ he said. ‘However, it won’t address the long-term funding gap or the need for reform of the broken local government finance model. This unprecedented increase before the final settlement shows that there is a growing understanding within the government about the crisis in local government finances. These pressures have been well-documented for some time, so it is disappointing that the funding has only been announced at this late hour.
‘More funding will be required to match the current level of demand-led pressures and stabilise the sector. It is welcome that most of the funding will be allocated though the social care grant. Social care, particularly children’s services, is the largest current pressure for the sector and the area most in need of additional grant funding.’
In light of the exceptional circumstances, the Treasury will be providing £500m with further details set out at the upcoming Budget whilst details on the distribution of this funding will be included in the final Local Government Finance Settlement in early February.
The government said the funding had to be used to address the pressures facing councils and improve performance, rather than saved for later use or spent on areas that are not a priority. Separately, councils will be asked to produce productivity plans which will set out how they will improve service performance and reduce wasteful spend – which the government defined as including spending on consultants and HR spending on equality, diversity and inclusion.
Image: Marco Oriolesi
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