Local authorities, particularly those under Tory leadership, have expressed deep disappointment over the financial settlement recently announced. The Levelling Up Secretary, Michael Gove, claimed that the Government is fully supportive of councils throughout the country, indicating that over £64 billion in funding will be made available for the coming year. However, councils have still voiced their concerns regarding the possibility of facing financial difficulties and potential bankruptcy, despite the substantial amount of funding being offered.
The local government finance settlement ensures that each council will experience a minimum 3% increase in their core spending power, which encompasses the combined amount of money they have available to spend coming from Government grants, council tax, and business rates. This increase confirms the figures outlined in the local government finance settlement policy statement released earlier this month, stating that the spending power for the 2023/24 period was £59.7 billion.
Councils struggling financially have continuously appealed to the Government for emergency funding to help safeguard essential frontline services. This need for additional funding has become more urgent in recent years, particularly due to substantial reductions experienced by local councils over the past decade. Since 2020, at least seven councils have issued a section 114 notice, essentially declaring their inability to balance their budgets as required by law.
In a written statement, Levelling Up Secretary Michael Gove reassured local councils that the settlement would grant over £64 billion to local authorities in England, marking an increase of nearly £4 billion, or 6.5%, in core spending power compared to the previous year’s allocation. Gove emphasized that this increase portrays the Government’s strong support for councils nationwide.
The settlement also outlines that council tax rises will be capped at 3% for upper tier councils, with the option to apply an additional 2% precept for social care. However, in light of significant financial failure, Thurrock Council, Slough Borough Council, and Woking Borough Council will be given “bespoke” referendum principles, with the ability to increase their council tax by specific percentages without needing to hold a referendum.
Despite the overall increase in funding, the Conservative-led County Councils Network (CCN) has expressed profound disappointment over the announcement, expressing concern that councils will still need to implement severe service reductions and impose higher council tax rises. The finance spokesman for the CCN, Barry Lewis, highlighted that the lack of emergency funding will result in an added financial burden on residents, especially during a time where inflation is high and the economy is stagnating.
Labour’s shadow minister for local government, Jim McMahon, criticized the provisional settlement, branding it as a short-term solution with potentially detrimental effects on local services and growth. He stated that the approach of the government puts at risk the welfare of vulnerable groups such as the elderly and children.
It is evident that the financial settlement has drawn mixed reactions from local councils and political figures. Despite the Government’s claims of showing significant support for local councils, the concerns raised by the councils are a clear indication that there is still a substantial funding gap that needs to be addressed. It remains to be seen how the ongoing financial challenges faced by local councils will be effectively tackled to ensure the delivery of essential services to communities nationwide.
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