Tory Councils Left Disappointed by Government Financial Settlement

Councils throughout the United Kingdom are expressing their frustration and disappointment with the recent financial settlement proposed by the Government. Despite the allocation of £64 billion in funding for the upcoming year, many councils still feel at risk of encountering financial challenges that could potentially lead them towards bankruptcy.

The local government finance settlement ensures that each council will receive a minimum annual 3% increase in their core spending power. This core spending power encompasses the funding derived from Government grants, council tax, and business rates. The increase in spending power, from £59.7 billion in 2023/24 to £64 billion next year, was confirmed in the local government finance settlement policy statement released earlier this month.

Struggling councils have been appealing to the Government for emergency funding to safeguard essential frontline services. In recent years, there has been an increase in spending power after a decade of substantial funding reductions. Despite this, seven councils have issued at least one section 114 notice since 2020, declaring their inability to balance their budgets as mandated by law.

Levelling Up Secretary Michael Gove released a written statement acknowledging the financial challenges faced by local authorities. He highlighted the significant increase in core spending power and emphasized the Government’s commitment to support councils at both local and national levels. Additionally, he mentioned the decision to maintain the 3% core spending power uplift before considering any council tax increases, a clear recognition of the ongoing financial pressures on all local authorities.

For upper tier councils, council tax increases will be capped at 3%, with an option to apply an additional 2% precept for social care. However, in light of the financial struggles faced by Thurrock Council, Slough Borough Council, and Woking Borough Council, they will be given “bespoke” referendum principles. Thurrock and Slough will have a core council tax threshold of 8%, while Woking will be allowed to increase bills by 10% without the need for a referendum.

Despite this settlement, the shadow minister for local government, Jim McMahon, criticized the Government’s approach, labeling it as “sticking plaster politics.” McMahon emphasized the need for better services and local growth, expressing concern that the Government’s current approach risks impacting essential areas such as care for the elderly and child protection.

The Conservative-led County Councils Network (CCN) also expressed disappointment with the settlement, warning that councils will now have to implement severe reductions to services and impose higher council tax rises. Barry Lewis, Conservative leader of Derbyshire County Council and CCN finance spokesman, highlighted the financial headwinds faced by councils and expressed disappointment at the Government’s decision not to provide emergency funding.

In response, the official spokesperson for Prime Minister Rishi Sunak defended the Government’s approach, stating that councils are given an average increase of 6.5% year-on-year and are responsible for managing their own budgets. However, this response was met with criticism from Shaun Davies, Labour chairman of the Local Government Association, who highlighted the funding gap of £4 billion over the next two years and the impact it will have on essential local services.

The proposed settlement will now be consulted on ahead of approval, but it is clear that many councils are still facing significant challenges. The ongoing financial struggles and the need to support essential services will undoubtedly remain key points of discussion in the coming months.