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Councils respond to Local Government Finance Settlement

Responding to the provisional Local Government Finance Settlement published today, Lord Porter, Chairman of the Local Government Association, said:

“Greater flexibility for local authorities in setting council tax levels will give some councils the option of raising extra money to offset some of the financial pressures they face next year. With no other national tax subject to referenda, the council tax referendum limit needs to be abolished so councils and their communities can decide how under-pressure local services are paid for, with residents able to democratically hold their council to account through the ballot box.

“Years of unprecedented central government funding cuts have left many councils beyond the point where council tax income can be expected to plug the growing funding gaps they face. Local government faces an overall funding gap of £5.8 billion by 2020. Children’s services, adult social care and homelessness services are at a tipping point as a result of funding gaps and rising demand and increasingly little is left to fund other services, like cleaning streets, running leisure centres and libraries, and fixing potholes. While some councils will receive extra funding next year, the Government needs to provide new funding for all councils over the next few years so they can protect vital local services from further cutbacks.

“It is good that the Government has accepted our call to avoid further New Homes Bonus changes and clarified plans to introduce a fairer funding system and to allow local government to keep more of its business rates income. We look forward to continuing our work with the Government on further business rates retention and the Fair Funding Review and remain clear that the extra business rates income should go towards meeting the funding gap facing local government and no council should see its funding reduce as a result of a new distribution system.

“Delays to when these reforms will be implemented mean councils are facing a financial cliff-edge that the Government has to address. Councils will see their core funding from central government further cut in half over the next two years and almost phased out completely by the end of the decade. Councils who will not receive a penny of this funding in 2019/20 will be pleased that the Government has recognised the need to find a way to help them. It must now also use the final Settlement to slow the pace of funding cuts and provide replacement funding to all councils over the next two years.

“This is essential to avoid councils reaching a financial breaking point which will threaten the existence of some local services. There is a real risk that the opportunities arising from a new way of funding the local services our communities rely on could be wasted if those very services are damaged beyond repair by the time they are introduced.

“Only with fairer funding, new powers and fiscal freedoms over the next few years and beyond can councils ensure children and adults receive the care they deserve, desperately-needed homes are built and roads are maintained to high standards and other services are protected, such as maintaining our parks and green spaces and running children’s centres and libraries.”

Visit the Local Government Finance Settlement webpage