Finance and funding

In the run-up to a debate in the Lords on the state of the economy in light of the Spring Statement, we highlighted how councils are uniquely placed to build communities that are inclusive, cohesive and promote people’s life chances. They do this by tailoring more than 800 local services to the needs of their residents, creating solutions to specific, local challenges.

We also emphasised the positive effect investing in councils will have on wider economic growth and the public finances. Research suggests that putting money into infrastructure and services such as social housing, local roads, and green spaces is good for the overall economy.

However, councils still face a funding gap of more than £3 billion in 2019/20, rising to £8 billion by 2024/25, with particularly acute pressures in adult social care, children’s services and homelessness support.

Speaking in the Lords’ debate, LGA Vice-President Baroness Thornhill (Lib Dem) asked the Government if it accepted the views of the LGA, the Institute for Fiscal Studies and local government finance officers that “the current model for funding local government is broken and unsustainable”.

She added: “The Government will be well aware of the substantial funding black hole facing local government. A conservative estimate from the LGA places the funding gap at £8 billion by 2025 if more money is not provided for those services that, in particular, are experiencing a marked growth in demand.

“The real-world impacts are being felt by adults and children in care, homeless families and children on the streets, and millions of users of damaged local roads.”

Lord Bates, Minister of State for International Development, responding for the Government, said: “The Budget of 2018 and the 2019/20 local government finance settlement delivered a real-terms increase in core spending power for local authorities in 2019/20. We expect authorities to receive final funding allocations in the normal timetable.

“The 2019 spending review will be launched in the summer and conclude in the autumn and will no doubt receive many representations.”

Elsewhere, the LGA’s analysis of the funding gap facing local authorities by the end of the year was quoted by Jeremy Corbyn MP, Leader of the Opposition, in Prime Minister’s Questions in early March, in the context of tackling serious violent crime.

He said youth and children’s services “are in crisis”, and that the “public services that were there to support young people have been systematically stripped away”.

Robert Halfon MP (Con), Chair of the Education Committee, and Caroline Lucas MP, former Leader of the Green Party, also used LGA figures in PMQs.

And Bridget Phillipson MP (Lab) quoted the LGA’s estimate of a £3.1 billion funding gap in children’s services in a Written Parliamentary Question about additional funding for children’s services.

As part of the LGA’s #CouncilsCan campaign, we will continue to seek to influence MPs and Peers ahead of this year’s Spending Review, highlighting the growing risk to vital local services if the Government does not take action to secure the financial sustainability of councils.

You can find out more about the LGA’s Spending Review campaign at www.local.gov.uk/councils-can. For more information about the LGA’s work in Parliament, please visit www.local.gov.uk/parliament

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