The final settlement includes an additional £190 million for local government, when compared to the indicative 2018/19 settlement announced this time last year.
KEY MESSAGES
- The final settlement includes an additional £190 million for local government, when compared to the indicative 2018/19 settlement announced this time last year. This is made up of:
- An additional £150 million in 2018/19 for an Adult Social Care Support Grant.
- An additional £31 million for the Rural Services Delivery Grant. This is £16 million more than proposed in the provisional settlement and will take the total grant to £81 million in 2018/19.
- An increase in the region of £9 million for the New Homes Bonus.
Councils who will receive this money will welcome the additional funding from central government. However, local services are still facing a funding gap that will exceed £5 billion in 2019/20, as well as a £1.3 billion pressure to stabilise the adult social care provider market today. The Government needs to allow local government to keep every penny of business rates collected to plug this growing funding gap.
- We estimate the additional council tax flexibility in the settlement to be worth up to £540 million in 2019/20 if all councils use it in both 2018/19 and 2019/20. This will give some councils the option of raising extra money to offset some of the financial pressures they face next year, but this is nowhere near enough to meet the funding gap. This means many councils will have to ask residents to pay more council tax while offering fewer services. 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.
- For 88 shire districts with the lowest council tax levels the new council tax referendum limit does not provide any more spending power, as they can already increase council tax by 3 per cent or more due to the £5 flexibility. For many other district councils, the positive impact is minimal for the same reason. We continue to call on the Government to offer further flexibility to these councils.
- The additional funding for adult social care is a recognition of our warning about the urgent need for the Government to further try and help councils tackle some of the immediate social care pressures they face. However, this is a temporary measure and is unlikely to have a significant positive impact on adult social care services when compared against an annual social care funding gap of £2.3 billion by 2020.
- It is extremely disappointing that the Government has chosen not to address the continuing funding gap for children’s social care. We have repeatedly warned of the serious consequences of funding pressures facing these services, for both the people that rely on them and the financial sustainability of other services councils provide. A substantial injection of new money from central government is the only way to protect the vital services which care for older and disabled people, protect children and support families.
- The New Homes Bonus makes up a considerable part of funding for some councils, particularly shire district authorities. It is positive that the Government has accepted our call to avoid further increases to the threshold and no holdback for decisions on new homes approved by the Planning Inspectorate.
- It is good that the Government has committed to find a way to help those councils who will no longer receive any core central government grant in 2019/20.
- An unhelpful error by the Valuation Office Agency means more than half of councils will have less income than they were planning for in 2018/19 following the allocations published in the provisional settlement. The revised allocations were published in mid-January, which has added to the challenge councils already face when trying to set a budget for next year. 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.
- A recent ComRes poll commissioned by the LGA found that the vast majority of parliamentarians (MPs 86 per cent and Peers 89 per cent) agree that councils should have more financial powers and freedoms. The majority of parliamentarians (MPs 84 per cent and Peers 81 per cent) also agree that additional funding should go to councils’ social care budgets to tackle the funding crisis.