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Settlement reaction: next year will be 'hugely challenging'

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Today’s local government finance settlement “contains little to provide any assurance” about the sustainability of services, ministers have been told.

Sector leaders have been reacting to the provisional settlement, in which housing and communities secretary James Brokenshire said councils’ core spending power would rise from £45.1bn in 2018-19 to £46.4bn next year, with much of the increase coming from scope to increase council tax.

Local Government Association chair Lord Porter (Con) said: “Next year will continue to be hugely challenging for all councils, who still face an overall funding gap of £3.2bn in 2019-20. It is therefore disappointing that the government has not used the settlement to provide further desperately-needed resources for councils next year.”

While Cllr Porter welcomed the government’s decision not to increase the threshold for the new homes bonus, he warned councils “will be forced to take tough decisions about which services have to be scaled back or stopped altogether to plug funding gaps”.

He urged the government to use next month’s final settlement to provide further resources.

Martin Reeves, finance spokesperson for the Society of Local Authority Chief Executives & Senior Managers, said the settlement offered “not much… cause for holiday cheer”, adding: “Ultimately it contains little to provide any assurance about the long-term sustainability of local services.”

“Emergency cash injections and putting more strain on an outdated council tax system simply will not do,” the Coventry City Council chief executive added. “An increasing number of councils are warning that they will soon be unable to deliver more than a minimum statutory offer, unless the key issues of sufficiency, certainty and flexibility are addressed.”

Solace president Jo Miller tweeted to express her bemusement that the government had promised to launch a “continuous improvement tool” to help councils become more efficient.

Peter John (Lab), the chair of London Councils, said the capital’s boroughs had experienced a 63% core funding reduction this decade, with the consultation on the fair funding review consultation having the potential to “compound” their funding challenges.

“The simple truth is that it is more expensive to run services in areas with high deprivation, with high salary and building costs, and where the population is growing rapidly,” Cllr John said. “The new formula for allocating funds should reflect that.”

County Councils Network chair Paul Carter (Con) said: “For the first time in many years, this settlement confirms that the government has recognised short-term pressures facing local government.”

He welcomed confirmation that some counties would benefit from business rate pilots, “rightly as a result of ensuring greater equity with London by reducing [London’s] pilot to 75%” retention.

However, Cllr Carter added: “Whilst today’s settlement contains vital short term support, it does not solve medium term financial pressures so tough decisions will still need to be taken and our members will have little choice but to raise council tax to meet demand-led pressures in services.

“Looking ahead, we should be under no illusions of the scale of the challenge facing county authorities, with the long-term future of councils dependent on whether we receive sustainable and fairer funding from 2020 onwards.”

However, Stephen Houghton (Lab), chair of the Special Interest Group of Municipal Authorities, was critical of the use of funding to eliminate negative revenue support grant.

“The secretary of state has decided today to entrench unfairness with his proposals for local government funding on negative RSG and rural grant,” he said. ”The most affluent are benefiting again, whilst those least able to shoulder the burden of paying for local services lose out.”

District Councils’ Network chair John Fuller (Con) said districts had been the worst hit type of council in terms of spending power changes since 2015.

But he said: “We are pleased that the government has listened to the voice of districts and removed the threat of negative [revenue support grant] – which is tax on local ambition – alongside no further changes to the new homes bonus baseline rate.”

New Local Government Network director Adam Lent tweeted to query Mr Brokenshire’s announcement of a potential clampdown on “risky” commercial investments by councils. 

“The best measure would be to fund councils sustainably so that they don’t need to rely on commercial revenue schemes to plug financial gaps,” he wrote.

 

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Readers' comments (1)

  • come on, this is much better than recent years, the business rates pilots are a real boost as is 3% council tax, continuing new homes bonus and floor on negative RSG....when the sector gets the best overall settlement for years it could spend a little time being positive.

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