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Ministry 'keen' to offer new multi-year settlement

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The Ministry for Housing, Communities & Local Government will be pushing the Treasury for a new multi-year settlement for the sector in this year’s spending review and is open to considering further devolution of powers, local government minister Rishi Sunak has told LGC.

The final local government finance settlement for 2019-20 was approved by parliament on Tuesday night. However, councils do not know how much funding will be available beyond that, or how it will be distributed.

Asked whether he was still confident the spending review would go ahead this year, given speculation Britain’s departure from the EU may now be delayed beyond 29 March, Mr Sunak said he had “no new information” and that it was still expected to take place “later this year”.

He said he did not know what period it would cover but he and housing & communities secretary James Brokenshire would both be pushing for a longer term deal. The last spending review in 2015 saw the sector given a four-year funding settlement.

Mr Sunak said: “It’s clear to me that people have really appreciated the four-year funding deal and that’s something the secretary of state and I are keen to [offer again].”

Asked what advice he had for councils grappling with setting their budgets in the face of the uncertainty beyond March next year, Mr Sunak said “budgets should be in a lot better shape” than anticipated before the Budget and the provisional finance settlement. The former included an extra £650m for social care while the settlement saw an additional £180m of business rates income made available to the sector. Mr Sunak also highlighted the £675m high streets fund announced at the Budget.

“That is to tackle one of the most pressing policy issues of our time and it is local government that’s been entrusted with it. People should look at that and feel confident,” he said.

The Public Accounts Committee today accused the government of being in denial about the perilous state of council finances in a report on its inquiry into local government spending.

Mr Sunak acknowledged there had been “ongoing discussions” with the committee how local government funding could be judged sustainable. He said: “We want a local government that can do three key things: support the most vulnerable, drive economic growth and thirdly to build strong communities.

“Part of that is funding but it’s not everything. Are the structures the right ones? Are the powers and regulations optimal for delivering on those three aims?”

Asked whether the government would consider new powers for local government, such as over skills or to levy a tourist tax, Mr Sunak said the spending review was the time to have “those conversations”. 

“Come to me with your ideas, what responsibilities would you like to take on, what powers would you like to have? What freedoms and flexibilities? We’re happy to put all those into the mix and sift through and see what makes sense.”

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