The Spending Review 2021

Building back better means building back local.

The Chancellor is conducting the 2021 Spending Review in exceptional conditions. 

We are dealing with the impact of the COVID-19 pandemic on people, the economy and public finances. 

But this is also the time to be bold and ambitious about reshaping the direction of this country for years to come. 

Councils have played a critical role throughout the past 18 months, turning rapidly changing policy into practice on the ground. 

The experience of the pandemic demonstrates that local government is a trusted delivery partner for Whitehall, making sure that our joint response to this crisis recognised local needs and impacts across our diverse communities.  

Throughout, councils learnt from and supported each other through sector-led improvement.  

For many people, their local area matters more now than it ever did, and will continue to play a significant role as we move further into recovery. 

Some groups and communities have been adversely affected by the health, social and economic impacts of the pandemic, and will need more help to recover, with some individuals needing support where they did not prior to the pandemic. 

For others, the issues they faced pre-pandemic – access to fast broadband, housing that is right for them and their families – have been amplified.  

This means that the role councils play will have an even greater significance in the lives of people as we all reimagine what our post-pandemic lives look like. 

We need a collective effort to rebuild our economy, get people back to work, level up inequalities across the country, and create new hope in our communities. 

We need a collective effort to level up and create new hope

Responding to the significant economic challenges ahead requires a renewed joint endeavour between local and national government as equal partners: building back better means building back local. 

The Government has set an ambitious target to level up the entire country and improve the lives of its citizens. 

The Prime Minister was clear that, to make progress on levelling up, we have to raise living standards, spread opportunity, improve our public services and restore people’s sense of pride in their community. 

All of these aims need the necessary funding and for councils to be empowered to help deliver on this shared commitment. 

It is clear that the starting point for this new approach to our public services needs to be a rethink of public finances, with:

  • a multi-year financial settlement providing local government with certainty over its medium-term finances
  • sufficiency of resources to tackle day-to-day pressures and the lasting impact of COVID-19
  • recognition of the benefits of investment directed by those closest to the opportunities for shared prosperity.

To achieve this, the Spending Review will need to move away from the traditional drivers of departmental spending towards a degree of fiscal decentralisation, in line with some of the world’s most productive economies.

The economic challenges our communities are facing require a bold response – place-based budgets that are in tune with the needs of the local economy. 

This Spending Review presents an opportunity to reset public spending in a way that is fit for the future and flexible to allow for the delivery of local priorities, and that empowers councils to achieve the ambition for our communities that central and local government share. 

Spending priorities

The LGA’s Spending Review 2021 Submission is organised into six priority themes. The proposals include a mix of revenue funding, capital funding, freedoms and flexibilities, as well as policy reform to relieve pressures on local government.

1. A strong and certain financial foundation 

The Spending Review needs to provide councils with sufficient funding to meet cost pressures and pre-existing challenges, but it is also an opportunity to enable councils to bring together the budgets of public services across a place to eliminate duplication and drive savings to the public purse.  

Our key proposal is for a multi-year ‘core’ local government funding settlement that provides sufficient certainty and resources. 

Excluding COVID-19 and pre-existing challenges, such as the education of children with special educational needs and disabilities (SEND), we estimate that councils face cost pressures of £2.6 billion each year – including £1.1 billion for adult social care alone – just to keep them at their 2019/20 level of quality and access. 

2.  Adult social care and public health 

The Government’s ‘Build back better: our plan for health and social care’ could be an important first step in moving toward the changes that are needed to ensure people of all ages are best supported to live the life they want to lead. 

However, if the plan’s potential is to be realised, the Spending Review must deliver new national funding to stabilise adult social care. Public health services have shown their value during the pandemic and are key to tackling health inequalities. 

The LGA’s proposals include a £1.5 billion injection of funding to stabilise the adult social care provider market, together with annual funding needed to meet the cost pressures mentioned above, and investing £900 million to return the public health grant to its 2015/16 level in real terms. 

3. Investing in communities and tackling health inequalities

The concept of levelling up is multifaceted and will require investment in social as well as physical infrastructure. It is vital that central and local government work together on these multiple issues, in a unique mix in each local area, at the same time. 

The LGA is proposing an unringfenced and ongoing ‘community investment fund’ – worth £1 billion in 2022/23 and increasing to £3 billion by 2024/25 – which councils can invest in supporting individuals and strengthening communities according to local priorities, including tackling health inequalities. 

4. Reaching net zero 

Councils are leading the way in helping the Government meet its aim for the UK to become a net-zero carbon economy by 2050. 

The LGA’s proposals include a new policy and fiscal framework, backed by crucial investment, to allow councils to help government achieve its net-zero ambitions, and measures to make sure its ambitious waste and recycling reforms are introduced in a financially sustainable fashion. 

5. Education and children’s social care 

Councils are ambitious about maximising the life chances of all children, regardless of their background. Equality of opportunity is a critical element of enabling levelling up and building thriving local areas.  

The LGA’s proposals include allowing councils to build new schools in their areas, providing the financial capital funding framework needed to support this, and dealing with pressures related to the education and care of children with SEND. 

6. Building back local economies  

Councils want to work with government on the economic recovery from COVID-19 as trusted partners – in particular, through greater devolution and powers to steer resources to local economic priorities.  

Key proposals include: dedicated local growth funding through the Shared Prosperity Fund and other initiatives; an innovative, devolved approach to making sure that local residents have the right skills to match the work opportunities of the future; measures to help councils secure affordable homes for all those who need one, including a housing stimulus package to deliver 100,000 homes each year; and reform of the housing revenue account system.

Read the LGA’s Spending Review 2021 Submission in full on our website. The Government will publish its spending plans for the next three years alongside the Budget on 27 October.

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