LGA response to the Local Government Finance Settlement

LGA media release 4 February 2015

The final Local Government Finance Settlement, published late yesterday, shows that councils across England will receive 8.5 per cent less funding from government to run local services in April 2015.

Following councils' call for government to reverse its decision to remove funding for Local Welfare Assistance schemes, the settlement included an additional £74 million for upper-tier authorities in 2015/16. Funding for local welfare assistance schemes in the current financial year was £172 million.

Analysis by the Local Government Association (LGA), which represents councils, shows that savings of £2.5 billion will need to be found from council budgets for 2015/16.

Responding to the settlement, LGA Chair Cllr David Sparks said:

"The future of our local services like libraries, youth centres and care for the elderly face a huge financial challenge.

"The Local Government Finance Settlement confirms that core central government funding to councils will be reduced by 8.5 per cent in April.

"In reality, cuts to budgets for things like fixing the roads and keeping parks open will have to be much bigger. Councils will have to divert more than £1 billion from other services in 2015/16 just to try to stem the crisis in funding for adult social care for another 12 months. This cannot continue. It is vital for those who rely on care and the millions more who rely on the hundreds of other services councils provide that government stops papering over the cracks and properly funds the ever-growing cost of caring for our elderly.

"Local authorities are now in the process of finalising next year's budgets. These savings will be the most difficult yet, and it is unavoidable that they will have an impact on local government's ability to improve people's quality of life and support local businesses.

"We must not forget that it is individuals who have paid the price of funding reductions, whether it is through seeing their local library close, roads deteriorate or support for young people and families scaled back. These local services need to be adequately funded in the next parliament if they are going to survive the next few years."

Responding to government's announcement of an additional £74 million for upper-tier authorities to go towards local welfare and adult social care, Cllr Sparks said:

"Government's original decision to scrap funding for local welfare schemes would have led to the withdrawal of emergency help for people in their times of need. For the past 12 months councils have been urging ministers to reconsider. It is good news for some of the thousands who may need to turn to their council for emergency support that local authorities have been listened to, resulting in some of this vital funding being reinstated.

"The provision of £74 million additional funding will help councils provide a lifeline to some of their most vulnerable residents. However, this still amounts to a reduction of almost £100 million in government funding for local welfare. At a time when councils are tackling the biggest funding cuts in living memory, many areas will struggle to protect their local support scheme from this cut from April. This is also unlikely to have a meaningful impact in alleviating the huge pressures on adult social care.

"The reduction in funding for local welfare comes on top of government's recent £40 million cut to discretionary housing payments – money used by councils to help people with housing costs. As a result of these two cuts to discretionary support, it is likely councils will have to significantly scale back the financial support available to help people pay the rent and keep a roof over their heads next year."

Notes to editors

  1. Yesterday's written statement by Kris Hopkins MP largely confirms the messages of the provisional settlement announcement made on 18 December 2014. The LGA's briefing on the provisional settlement can be found here.
  2. The LGA has been consistently warning that government's original decision to remove local welfare funding would lead to many local authorities having to withdraw support.

    Local welfare schemes were introduced by councils in 2013 to replace crisis loans and community grants. Over the past two years they have given a helping hand to hundreds of thousands going through a time of crisis or transition. This has included people facing the threat of homelessness, families struggling to put food on the table and care leavers setting up home for the first time.

    Government has provided £374 million funding the schemes over the past two years but, prior to this week's settlement, had been set to completely withdraw funding in 2015/16.

Local Welfare Assistance: Impact of withdrawal of local welfare funding

ends

Contact

Simon Ward, Deputy Head of News and Internal Communications
Local Government Association
Telephone: 020 7664 3147
Email: simon.ward@local.gov.uk
Local Government House, Smith Square, London SW1P 3HZ

www.local.gov.uk

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7 July 2015