LGA responds to Treasury one-year Spending Review announcement

“It is hugely disappointing that councils will only get a one-year funding settlement for the third year in a row."

Responding to the Treasury announcement that it will conduct a one-year Spending Review in November, Cllr James Jamieson, Chairman of the Local Government Association, said:

“It is hugely disappointing that councils will only get a one-year funding settlement for the third year in a row. This makes it incredibly difficult for them to plan how to provide the local services our communities rely on and which have proved so vital during the pandemic, including public health, adult social care, children’s services, homelessness support, and help for those in financial hardship.

“This is a missed opportunity for the Government to draw a line under inefficient short-term budgeting, that leads to higher costs to the public purse, and to allow councils to set reliable medium-term financial strategies. Only with sustainable and certain long-term funding can councils protect and improve services and play a leading role in addressing the stark inequalities the pandemic has exposed, developing a green recovery, tackling skills gaps and rebuilding the economy so that it benefits everyone.

“We urge the Government to publish this Spending Review as soon as possible as the end of November is incredibly late for councils to find out how much money they will have to provide services next year. Councils will face a £4 billion funding gap next year just to keep services running at today’s levels and need urgent certainty about how to set budgets and to plan any measures they may be forced to take to cut spending. Before the Spending Review is announced, the Government must confirm that the resources councils have this year will not reduce and there will be no business rates reset next year.

“Many councils were in a difficult financial position before the pandemic hit after a decade of central government funding reductions. They will continue to face demand pressures on day-to-day services - some pre-existing and others made more significant by the impact of COVID-19 – amid substantial income losses, such as from local taxation, fees and charges.

“The Government has provided some much-needed support but significant challenges remain. It is vital that the Government addresses in full the financial challenges facing councils as a result of COVID-19, including all lost income and local tax losses, and provides further investment so councils can protect and improve local services next year.”