The 2022 Autumn Statement confirmed that budgets for each central government department will be maintained at least in line with those set in the 2021 Spending Review.
Chancellor Jeremy Hunt set out a number of fiscal measures and plans to stabilise public services with the aim of addressing the current economic uncertainty facing the country.
As the LGA flagged in a survey published ahead of his announcement, councils have been hit by additional cost pressures that were not included in their budgets this year – including pay pressures, energy price increases and uplifts in contract prices.
So, it was good to see the Chancellor use the Autumn Statement to act on the LGA’s call to save local services from spiralling inflation, demand and cost pressures.
Key measures include: extra grant funding for social care and schools; deferment of adult social care reforms for two years; higher referendum limits for council tax increases; full compensation for business rates measures; a higher-than-anticipated social housing rent cap; a continued commitment to levelling up; extension of the Household Support Fund; and new devolution deals in Suffolk, Norfolk, Cornwall and the North East.
While the financial outlook for councils from 2023-25 now looks better than expected, additional cost pressures in the current financial year remain unmet. The LGA estimates these at around £2.4 billion.
Meanwhile, we continue to emphasise that council tax is not the solution to meeting long-term pressures on key public services, such as adult social care, child protection and homelessness prevention.
The continued model of relying on council tax-raising powers to increase councils’ core spending power is not sustainable or fair on local taxpayers or those who rely on council services.
Councils want to work with central government to develop a long-term strategy to deliver critical local services and growth more effectively. Alongside certainty of funding and greater investment, this also needs wider devolution, so local leaders have greater freedom from central government to take decisions on how to provide vital services in their communities.
Social housing
- Rent rises will be capped at 7 per cent in 2023/24.
The LGA says: “Councils recognise the pressures on tenants, exacerbated by the rising cost of living and inflation, and support moves to keep rents as low as possible. Councils will still have to cope with the additional financial costs.”
Devolution and levelling up
- The second round of the Levelling Up Fund will allocate at least £1.7 billion to priority local infrastructure projects.
- The Government reiterated its commitment to devolution, with new deals expected in Suffolk, Cornwall, Norfolk and the North East.
- Ministers are exploring the potential to provide single departmental-style settlements for devolved areas.
The LGA says: “Devolution now needs to be extended further, faster and to more places. It offers the best value for money and is the right response to fiscal constraints… councils will deliver better outcomes than a centralised system characterised by funding silos and local duplication of effort.”
Household Support Fund
- £1 billion to extend the Household Support Fund in England over 2023/24.
The LGA says: “The LGA, councils and partners have consistently called for local welfare funding to be put on a more sustainable footing. This commitment to a full year of funding, alongside essential measures in the mainstream benefit system, recognises the strength of local delivery.”
Adult social care
- New grant funding of £2.7 billion over two years, partly allocated via the Better Care Fund and partly directly to councils.
- Option to raise social care council tax precept by 2 instead of 1 per cent.
- £3.2 billion over two years freed up by delay to charging reforms.
The LGA says: “Although the additional funding to adult social care is welcome, it falls significantly short of the £13 billion we have called for to address the pressures facing the service, including significant recruitment and retention problems. Councils have always supported the principle of adult social care reforms and want to deliver them effectively, but underfunded reforms would have exacerbated significant ongoing financial and workforce pressures.”
Public health
- An additional £6.6 billion over two years for the NHS.
- No announcement on an increase in public health grant, which has reduced by 24 per cent in real terms over the past decade.
The LGA says: “It is a false economy to continue to underfund public health services, given their role in increasing years of healthy life, tackling the growing burden of chronic diseases, supporting people back into employment, and preventing future pressure on health and care services.”
Children’s social care
- £3.2 billion of the funding announced for adult social care will be distributed through the Social Care Grant for adult and children’s services.
The LGA says: “The number of children in care has again reached record highs, so this additional investment is very welcome. However, we need to continue working with government towards a sustainable funding solution.”
Council tax
- Referendum limit for basic council tax rises up to 3 per cent.
- Adult social care precept increased from 1 to 2 per cent.
The LGA says: “No national tax is subject to referenda… residents are able to democratically hold their council to account through the ballot box. Council tax increases add an extra financial burden on already struggling households.”
Business rates
- £13.6 billion of targeted support over five years to support businesses following revaluation of business rates in April 2023.
- Business rates multipliers will be frozen in 2023/24 – described as a £9.3 billion tax cut over five years.
- Extension and increase in support for retail, hospitality and leisure businesses.
- £500 million over three years to protect small businesses facing loss of rates relief due to the revaluation.
The LGA says: “It is positive that the Government has provided assurance that local authorities will be fully compensated for these business rates measures, which… will provide support to a range of businesses affected by the cost-of-living crisis and the 2023 revaluation.”
Education and SEND
- £4.6 billion increase over two years in the core school budget.
The LGA says: “It is vital that a significant part of this additional funding is allocated to councils to support children and young people with special educational needs and disabilities.”
Asylum and refugees
- £2.5 billion over two years to support Ukrainian and Afghan refugees.
The LGA says: “This should include a focus on securing housing and avoiding homelessness, alongside early confirmation of future funding for councils for their crucial role in helping people build new lives in their new communities.”
Health & care workforce
- Publication of an NHS workforce plan next year.
- Independent review into how integrated care boards can work with appropriate autonomy and accountability.
The LGA says: “A comprehensive workforce plan must extend to the non-NHS health workforce commissioned or directly employed by local councils… and to the adult social care workforce and those in the community and voluntary sector without whose support the NHS would not be able to operate.”