Spending Round 2019

Councils now have some of the funding certainty and stability they need to plan their budgets for 2020/21, after Chancellor Sajid Javid announced the biggest year-on-year real terms increase in local government spending power in a decade.

His one-year Spending Round included more than £3.5 billion for vital local services. This will allow councils to meet the increase in cost and demand pressures expected in 2020/21, which the LGA has calculated as £2.6 billion.

The Chancellor confirmed that key grants to local government will continue next year, including New Homes Bonus, troubled families, winter pressures, and the Better Care Fund.

There was also confirmation that 75 per cent business rates retention and the Fair Funding Review will now be introduced in April 2021, not next year. This will allow time for the remaining decisions to be made over the design of the reforms, and for councils to be consulted.

The Government has proposed a council tax referendum limit of 2 per cent, which would raise £1.1 billion after taking into account the increase in the tax base. The ability to levy an adult social care precept for a further year gives councils the potential to raise a further £500 million to help people in our communities who need care and support.

However, council tax cannot provide a long-term solution to funding social care, as it raises different amounts of money in different parts of the country and not necessarily related to need.

Overall, we are pleased the Government has responded to our calls and provided desperately needed new money, including £1 billion for social care and £700 million for children and young people with special educational needs and disabilities (SEND).

With this investment, councils will be better able to ensure older and disabled people can live the lives they want to lead, and to support our most vulnerable young people.

This Spending Round shows that the LGA and councils are successfully making the case that investing in local government is good for the nation’s prosperity, economic growth and health and wellbeing. The evidence shows that giving councils the freedom and funding to make local decisions improves national outcomes.

The LGA now wants to work with the Government on how its Queen’s Speech can reignite the devolution process so councils can continue to lead their local areas and improve the lives of their residents. Over the coming year, we will continue to press for long-term financial certainty and sustainable funding for local government.

Public health

  • Real terms increase to the public health grant budget.

LGA view: “A real terms increase for public health is a welcome change of direction and recognises councils’ record on public health improvement.”

Town centres and high streets

  • £241 million from the Towns Fund in 2020/21 to support high street and town centre regeneration.

LGA view: ”It will be important that the fund is flexible and that any processes for bidding are kept simple and  proportionate.”

Social care

  • Additional £1 billion for adult and children’s social care.
  • £2.5 billion of existing social care grants to continue.
  • Consultation on 2 per cent adult social care council tax precept, for a further £500 million.

LGA view: “The Spending Round is positive for social care and will help in the coming year. However, with people living longer, pressures will continue to rise…we need national solutions to how we fund care and support for the long term.”

Building safety programme

  • Additional £24 million to support the new building safety regime – on top of £600 million for removing dangerous ACM cladding on private and council flats.

LGA view: “Councils will also need funding to address other building safety issues, including replacing other dangerous cladding systems and fire doors that do not meet the required standard.”

Education and children

  • Per pupil funding for all schools to rise in line with inflation (1.8 per cent) in 2020/21.
  • Additional £700 million to support children and young people with SEND.
  • An extra £66 million to increase the hourly rate paid to childcare providers for free childcare.
  • £30 million more to safeguard children from child sexual exploitation.

LGA view: “We are keen to work with the Government to tackle the high needs funding gap facing councils as demand for support continues to increase.”

Housing and homelessness

  • An additional £54 million (total £422 million) for MHCLG to reduce homelessness and rough sleeping.
  • MHCLG to consult on mandatory accessible housing standards in building regulations.

LGA view: “This additional resource will enable local authorities to continue to prevent people from becoming homeless…however, a long-term solution is needed to place homelessness services on a sustainable footing and prevent people from losing their home.”

EU funding

  • The Government has guaranteed funding for UK organisations receiving EU funding in the event of a ‘no deal’ Brexit.
  • There was no announcement on the UK Shared Prosperity Fund, the Government’s replacement for EU funding.

LGA view: “The ESIF Programme has provided £5.3 billion to local areas in England and it is essential there is not a gap before the introduction of a domestic replacement. This…should be viable, locally driven, democratically accountable and at least equal in value to the funding streams it is replacing.”

Health education

  • A £1,000 central training budget for each nurse, midwife and allied health professional over three years.

LGA view: “Local government needs confirmation that the £210 million set aside for nurses’ continuing professional development will extend to health visitors and school nurses.”

This is an edited version of the LGA’s ‘on the day’ briefing on the Spending Round, see www.local.gov.uk/parliament/briefings-and-responses/spending-round-2019-day-briefing. The Treasury documents are available at www.gov.uk/government/publications/spending-round-2019-document. The LGA’s annual finance conference takes place on 7 January – visit www.local.gov.uk/events to book your place


Managing demand-led services

Spending plans favour upper-tier councils