Local authorities across the United Kingdom have expressed their disappointment with the financial settlement announced by the government, stressing that many of them remain at risk of effective bankruptcy despite the availability of £64 billion in funding for the next year.
The local government finance settlement ensures that each council will receive a minimum annual 3% uplift in their core spending power, which is the total amount they have available to spend from a combination of Government grants, council tax, and business rates. This increase in spending power, compared to the £59.7 billion allocated in 2023/24, aligns with the figures outlined in the local government finance settlement policy statement released earlier this month.
Over the years, various councils have appealed to the government for emergency funding to safeguard essential frontline services, particularly following a decade of substantial funding cuts. Seven councils have issued at least one Section 114 notice since 2020, declaring their inability to balance their budgets in compliance with the law.
In a written statement, Levelling Up Secretary Michael Gove stated that the settlement provides over £64 billion for local authorities in England, representing an increase of almost £4 billion or 6.5% in cash terms in core spending power compared to 2023/24. Gove emphasized that the increase demonstrates the government’s commitment to supporting councils across the country.
Addressing the concern of ongoing financial pressures, the government has maintained the minimum core spending power uplift of 3% before decisions are made on council tax increases. Gove highlighted that this decision acknowledges the challenges faced by all local authorities.
As in previous years, council tax increases for upper tier councils will be capped at 3%, with an option to apply an additional 2% precept for social care. However, bespoke referendum principles will be applied to Thurrock Council, Slough Borough Council, and Woking Borough Council, in response to significant financial failure.
Despite the Chancellor’s decision, the County Councils Network (CCN) has expressed deep disappointment with the announcement, warning that councils will now have to implement more severe reductions to services and impose higher council tax rises.
Conservative leader of Derbyshire County Council and CCN finance spokesman, Barry Lewis, emphasized the pressing need for emergency funding to address the substantial financial challenges faced by councils. He stated that the lack of action by the government will inevitably result in substantial council tax increases and service reductions, posing a significant burden on residents amidst a cost-of-living crisis.
Representatives from the Labour party have also criticized the settlement, with Shadow Minister for Local Government, Jim McMahon, describing it as “sticking plaster politics.” Labour has pledged to support councils in delivering better services and local growth, emphasizing the need to mitigate the impact of Tory economic mismanagement on local authorities.
In conclusion, the local government and various political representatives have deemed the financial settlement to be insufficient in addressing the critical funding gap faced by councils. The ongoing lack of additional funding for local services poses a risk of further cuts to essential community services, which are vital for the well-being of the public. The local authorities urgently require new funding to bridge the existing gap and maintain the services that communities rely on every day.
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