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LGA responds to Local Government Finance Settlement

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

“The LGA has been working hard to try and secure new funding for all councils over the next few years. The new £150 million announced today is recognition of the LGA’s warning about the urgent need for the Government to further try and help councils tackle some of the immediate social care pressures they face. It is good that the Government has confirmed it will avoid further New Homes Bonus changes and has committed to find a way to help those councils who will no longer receive any core central government grant in 2019/20.

“The additional one-off social care funding announced today is a temporary measure and needs to be compared against an annual social care funding gap of £2.3 billion by 2020.

“Core central government funding to councils will be further reduced by half over the next two years and almost phased out completely by the end of the decade. We have warned that councils also face an unprecedented surge in demand for children’s services and homelessness support. This is leaving increasingly less money for councils to fund other services, like fixing potholes, cleaning streets and running leisure centres and libraries.

“Councils in England face an overall funding gap that will exceed £5 billion by 2020. We remain clear that the Government needs to allow local government to keep every penny of business rates collected to plug this growing funding gap and provide the £1.3 billion needed right now to stabilise the care provider market.

“Town halls face significant challenges as they try and set budgets this year and some councils continue to be pushed perilously close to the financial edge. Many will have to make tough decisions about which services have to be scaled back or stopped altogether to plug funding gaps. Extra council tax raising powers will helpfully give some councils the option to raise some extra income but will not bring in enough to completely ease the financial pressure they face. This means many councils face having to ask residents to pay more council tax while offering fewer services as a result.

“More than half of councils will have less income in 2018/19 following an error by the Valuation Office Agency. Councils should not be penalised for this error and we continue to call on the Treasury to use the central share of business rates to ensure that no council receives less than what they have been planning for in 2018/19 following the allocations published in the provisional settlement in December.

“Councils are the ones who can make a difference to people’s lives by building desperately-needed homes, creating jobs and school places, providing dignified care for our elderly and disabled, boosting economic growth, cleaning streets and fixing potholes. But the money local government has to maintain these vital services is running out fast. Only with the right funding and powers, can councils continue to lead their local areas, improve residents’ lives, reduce demand for services and save money for the taxpayer.”

View our Local Government Finance Settlement 2018/19 page