The Chancellor’s statement offered councils some short-term financial certainty, but no long-term solutions to chronic problems such as adult social care.
Local authority core spending power is projected by the Government to rise by 4.5 per cent in cash terms, or £2.2 billion in 2021/22, according to last month’s Spending Review announcement.
This increase is largely due to social care authorities being able to increase their council tax bills by up to 5 per cent – which includes a 3 per cent adult social care precept.
The LGA said it was good that the Spending Review provides a potential 4.5 per cent increase to support vital local services. However, council tax rises have never been the answer to the long-term pressures faced by councils, particularly in social care, and will place a significant financial burden on households.
Alongside council tax-raising powers, Chancellor Rishi Sunak announced extra funding for adult and children’s social care to help address some – but not all – of the pressures these services face next year.
With council services continuing to be critical in the fight against COVID-19, the LGA said it is good that the Chancellor has also provided further funding for councils to manage the cost pressures they face as a result of the pandemic. This includes extending the sales, fees and charges income compensation scheme and setting out plans to cover some irrecoverable council tax and business rates losses.
“Only with the right funding and freedoms, can councils lead local efforts to level up the stark inequalities the pandemic has exposed”
As the impact of the pandemic remains uncertain, this COVID-19 support will need to be kept under review and probably extended.
The LGA was also pleased to see the introduction of a new £4 billion Levelling Up Fund which will help tackle our complex and fragmented funding system for local infrastructure. However, we are concerned by the prospect of a competitive bidding process when councils are focused on protecting communities and businesses from the impact of the pandemic.
And the LGA expressed disappointment that the Spending Review did not include additional funding for public health. This runs contrary to addressing the stark health inequalities exposed by COVID-19 and levelling up our communities. Keeping people healthy and well throughout their lives reduces pressure on the NHS and social care.
Overall, the Spending Review provides more certainty for councils next year, but councils will still have to find savings to already stretched budgets in order to plug funding gaps and meet their legal duty to set a balanced budget in 2021/22.
The long-term outlook remains unclear and there remains a desperate need to find a long-term solution for the future of care and support.
Amid the urgency of the current crisis, the Spending Review has used many existing centralised processes and funding streams. In the coming months, there is a need also to refresh the debate on English devolution and hand down real power to our diverse communities through local government, the LGA has said.
Public finances will undoubtedly be under huge strain in the years ahead but investment in our local public services is critical to our national recovery next year and beyond.
Only with the right funding and freedoms, can councils lead local efforts to level up the stark inequalities the pandemic has exposed and level up the economy so that it benefits everyone.
Funding
COVID-19
- £1.55 billion for additional expenditure pressures.
- £762 million to compensate for 75 per cent of irrecoverable loss of council tax and business rates revenues.
- Extension of COVID-19 sales, fees and charges reimbursement scheme until the end of June 2021.
LGA view: “Provides some much-needed stability, but will need to be reviewed.”
Council tax
- Referendum threshold stays at 2 per cent.
- Social care authorities can levy a 3 per cent adult social care precept.
- £670 million council tax payment support for poorest households.
LGA view: “Council tax has never been the answer to the long-term pressures councils face…will bring in extra funding but place burden on households.”
Borrowing
- End of use of Public Works Loan Board (PWLB) for investment property bought primarily for yield.
- Cuts to PWLB lending rates.
LGA view: “Cut in lending rates is positive; change of lending terms risks service delivery, including housing and regeneration.”
Pay
- Minimum £250 increase for public sector workers earning less than £24,000.
- Other public sector pay rises paused.
LGA view: “Government cannot freeze local government pay. A pay claim for 2021/22 is expected from trade unions very soon.”
People
Adult social care
- £300 million social care grant (for children and adults).
- Last year’s £1 billion social care grant to continue.
- Government proposals on the future of care expected next year.
LGA view: “Continuation of sticking plaster approach to funding adult social care.”
Public health
- Public health grant maintained.
- Government to set out further action to improve population health.
LGA view: “Lack of new funding for public health runs contrary to the aim of addressing the stark health inequalities exposed by COVID-19.”
Early years/youth services
- £44 million for early years education.
- £100 million to deliver the National Citizen Service (NCS) and invest in youth facilities.
LGA view: “Disappointing that this is not a more significant and immediate investment to support providers during this time.”
Skills
- £2.9 billion Restart programme providing tailored support to over one million jobless people to help them find work.
LGA view: “Local government offers to work with the Government to plan, commission and deliver Restart so it can align with local services and training opportunities.”
Housing/homelessness
- £20 billion in multi-year capital investment to underpin the Government’s long-term housing strategy.
- £254 million to support rough sleepers and those at risk of homelessness during COVID-19.
LGA view: “Positive to see further Government investment to support the building of new homes and additional funding that will help councils support people at risk of rough sleeping and homelessness.”
Places and other
UKSPF
- £220 million to help local areas prepare over 2021/22 for the introduction of the UK Shared Prosperity Fund.
LGA view: “Government must now work with all local areas to ensure there is a smooth transition to the new funding regime.”
Levelling Up Fund
- £4 billion fund for local areas in England to invest in high-value local projects up to £20 million.
- First round of bids to be launched in the new year.
LGA view: “The best way to make decisions about local investment is by working with councils, which know the needs of their areas best.”
Potholes
- £1.7 billion in 2021/22 for local roads maintenance.
LGA view: “Positive funding boost to help councils fix our local roads.”
Cyber security
- £16 million to support modernisation of local authorities’ cyber security systems.
LGA view: “We look forward to meeting with government to understand how this money will be allocated.”