The recent publication of a provisional local government finance settlement has evoked dismay and grave concern among local government leaders regarding the future of council services. Levelling up secretary Michael Gove introduced a £64bn funding package, which fell short of the additional funding that councils had been desperately hoping for.
According to Kate Ogden, senior research economist at the Institute for Fiscal Studies, the 6.5% increase in general purpose funding is “roughly in line with what could have been expected” based on last year’s tentative plans. However, the increase fails to compensate for the higher than expected inflation, resulting in real terms funding being around 3% less than anticipated for 2024-25.
The Local Government Association expressed their disappointment, warning that the settlement will force councils to raise council tax bills in order to acquire the much-needed funding. LGA chair Shaun Davies stated that the settlement does not meet the severe costs and demand pressures that all councils are expected to face in the coming year, leaving local services vulnerable to further cuts.
The County Councils Network also voiced their disappointment, with finance spokesperson Barry Lewis highlighting the lack of additional funding as a missed opportunity to avoid severe reductions to services and higher council tax rises. The District Councils’ Network echoed this sentiment, expressing concerns about the acute financial pressures that district councils will continue to face.
London Councils anticipates that despite the funding announcement, boroughs in the capital will still face a significant funding shortfall, prompting acting chair Claire Holland to emphasize the insufficiency of the measures in plugging the budget gaps and restoring stability to town hall finances.
Jonathan Carr-West, chief executive of the Local Government Information Unit, described the provisional settlement as “too little, too late” in addressing the severe problems in local government finance. He also highlighted the lack of confidence in local government’s financial resilience, citing the bankruptcies of several councils earlier in the year as evidence of the ongoing challenges.
It is evident that the finance settlement has left local government leaders feeling disillusioned and with grave concerns about the future of council services. The failure to provide the necessary additional funding leaves councils in a precarious position. With increased pressure to raise council tax and make severe reductions to services, the ability of councils to support vulnerable individuals and maintain public spaces is at risk. The implications of this funding gap are far-reaching and will undoubtedly impact communities across the country.
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