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£10 billion Spending Review investment needed to protect and improve local services

The LGA has used its submission to set out the need for the Chancellor to use the CSR to provide an additional £10.1 billion per year in core funding to councils in England by 2023/24.

  • Councils in England will face a funding gap of more than £5 billion by 2024 to maintain services at current levels.

  • This figure could double amid the huge economic and societal uncertainty caused by the COVID-19 pandemic.

  • The Local Government Association (LGA) has set out in its Comprehensive Spending Review  (CSR) submission how £10 billion is needed to not only plug this gap but meet growing demand pressures and improve services for communities.

The LGA said the Government’s first CSR in more than a decade must provide sustainable and certain long-term funding to councils, bring power and resources closer to people and finally begin cross-party work to provide a sustainable, long-term funding solution for adult social care services.

It comes as councils continue to demonstrate their vital role as local leaders by working tirelessly to protect the most vulnerable, support businesses and continue to deliver vital services as we enter the next phase of this pandemic.

The LGA’s detailed and ambitious submission to the Treasury shows how with the right powers, sustainable funding, and enhanced flexibilities councils can continue this vital work and ensure our communities are able to prosper in the future.

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 spiralling 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.

The LGA has used its submission to set out the need for the Chancellor to use the CSR to provide an additional £10.1 billion per year in core funding to councils in England by 2023/24. This is made up of:

  • a funding gap facing councils in England of £5.3 billion by 2023/24. This is just to maintain services at today’s level. This gap, which could double due to the uncertainty resulting from the continued impact of COVID-19, assumes annual 2 per cent council tax increases and inflation-linked growth in grants.

  • £1.9 billion for services struggling under increased demand. For example, in children’s social care and homelessness services where councils have had to overspend on budgets in recent years to try and cope.

  • However, councils are ambitious to go beyond just managing the current challenging state of local finances and services and need to be able to play a leading role in helping communities recover and rebuild after the pandemic. The LGA’s submission sets out how a further £2.9 billion could be used by councils to help improve services and reduce inequalities. This includes investment in early intervention and prevention, reforming adult social care pay, boosting connectivity, improving parks and green spaces and more.

Councils stand ready to provide local solutions to the national challenges we face. For this to happen, the Government needs to use the CSR to radially re-think public spending in a way that is fit for the future and empowers councils to deliver on the ambition for our communities that central and local government share.

A three-year CSR also presents an opportunity to move away from councils only being able to set short-term budgets. The LGA is urging the Government to also commit to a three-year local government finance settlement this year to cover general grant funding, specific funding such as the public health grant and council tax flexibilities. This needs to be accompanied by a four-year settlement for consolidated capital investment to match the Chancellor’s timeframe for investment.

Cllr James Jamieson, LGA Chairman, said:

“The pandemic has shone a light on the highly valued services councils provide - including public health, adult social care, children’s services, homelessness support, and help for those in financial hardship.

“Councils are focused on supporting communities through this crisis and beyond as we look to rebuild our economy, get people back to work and level up inequalities. That is why the first Comprehensive Spending Review in more than a decade will shape the direction of this country for years to come.

“Securing the immediate and long-term sustainability of local services must be the top priority.

“The ambition of councils goes way beyond just maintaining services the way they are today. We want to create new hope in our communities. With the right funding and freedoms, councils can improve the lives of their residents, address the stark inequalities the pandemic has exposed, develop a green recovery, address skills gaps and rebuild the economy so that it benefits everyone.”

Notes to editors

Read ‘Rethinking public finances’ - the LGA’s submission to the 2020 Comprehensive Spending Review.