A further one-off lump sum to cover rising social care costs is under consideration across Whitehall in advance of local government potentially gaining extra freedom to raise council tax in next year’s comprehensive spending review, LGC understands.
Any extra funding for care for 2019-20 could be announced in next week’s Budget, although LGC understands the Ministry of Housing, Communities & Local Government is keen a package is devised that is seen to benefit the whole sector, not just social care.
Meanwhile, the ministry is understood to be willing to fight to retain the new homes bonus – which some speculate could be axed – as it is seen as a powerful tool to incentivise house building.
The ministry’s permanent secretary Melanie Dawes acknowledged last week at the Society of Local Authority Chief Executives & Senior Managers summit that there are “really serious, short-term pressures on the local government system”.
Asked about lifting council tax increase limits, Ms Dawes said “we are very much up for that conversation”. She added: “Council tax has been part of the conversation of the spending review – how much can we lean on the local taxpayer rather than the national taxpayer? There’s a choice there.”
While Ms Dawes said it is “difficult” to ask residents to pay more tax, she added: “It’s in play and I think we should have a conversation about it but, at the end of the day, it’s about political choices about where you fund something from.”
Discussions about council tax have also mooted extending the social care precept beyond 2019-20 and providing councils with more flexibilities to spend the money raised on children, not just adults.
Solace finance spokesman Martin Reeves said he would welcome anything that gave local authorities more freedoms and flexibilities but added “it’s not sufficient”.
“The idea that [extra funding for social care and more discretion around council tax increases] can do anything other than sort out our short-term challenges is clearly going to recreate the problems we have got with no sustainable funding solution beyond 2020,” he said.
Chartered Institute of Public Finance & Accountancy chief executive Rob Whiteman predicted the Budget could be “more helpful than people are expecting because the government has some short-term money available and politically it needs to show it is ending austerity”. But he feared the spending review would be “worse than predicted because it’s still likely to be very tight”.
LGC previously reported how the ministry has proposed increasing the new homes bonus baseline in 2019-20. There has since been speculation the scheme could be scrapped in the spending review.
District Councils’ Network chair John Fuller (Con) told LGC he was “hopeful” it will remain, adding: “While there would be a financial impact [on councils if it was scrapped], what does it say about the government incentivising councils to build the housing the country needs?”
Solace president Jo Miller last week described the government’s lack of financial forward-planning for councils as “terrifying, inept, grossly unfair”.
Ms Dawes said she “absolutely” understood Ms Miller’s comments and added the sector’s financial pressures were at the “forefront of our minds”. Ms Dawes urged councils to provide her with the evidence to lobby for them to be placed on a sustainable footing.
Several senior figures within the sector said they had noticed a bolder approach to the ministry’s lobbying within Whitehall for new funding for local government.
A senior local government source told LGC there had been “an enormous step change” in the ministry’s approach. The source specifically praised local government minister Rishi Sunak and housing and communities secretary James Brokenshire who is said to have been regularly explaining to Theresa May how the “squeeze cannot continue” on councils.
“With this ministerial team and their new advisors there has been a much stronger departmental representation not just with the Treasury and Number 10 but in conversations with other departments where, in the past, they gave in too easily,” the source said. “They are standing up for us more and playing a much cleverer political game with the rest of Whitehall where they know they have got to give a bit but they are expecting something in return.”
Cllr Fuller said the Treasury is “much more engaged on local government finance” than before. “There is a recognition that we need to get to the start line, which is the spending review, and the Treasury understands there’s no point in us running out of petrol before we even get there,” he said.