LGA Responds To The Local Government Finance Settlement

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

“Giving councils the option to fix longer-term funding settlements is hugely significant. The LGA has long-argued that it is crucial for councils to be able to plan ahead for more than 12 months at a time. This is an important step towards the financial certainty councils need to run important local services to the high standard our residents deserve and will allow councils to review the level of financial reserves they need to hold.

“Greg Clark has responded to our call for greater flexibility for councils in setting council tax levels. This will give local authorities the power to raise extra money to offset some of the impact of the financial pressures they face next year. Councils will be able to raise council tax by up to an additional 2 per cent to help tackle local social care funding pressures. The settlement recognises the varying impact of these measures across the country in the way it distributes the remaining government grant to councils and we’re also pleased that our call for low-taxing councils to be able to raise a minimum of £5 extra per household per year has been agreed. Both measures are for the lifetime of this Parliament.

“Despite receiving a flat-cash settlement over the next four years, there are still significant challenges ahead for councils who will have to make efficiency and other savings sufficient enough to compensate for any additional cost pressures they face. These include those arising from general inflation, cost pressures in the care sector, increases in the number of adults and children needing support and rising levels of need, increases in demand for everyday services as the population grows and pressure on homelessness budgets and increases in core costs such as national insurance, the National Living Wage and pension contributions.

“Our spotlight on social care funding pressures has been acknowledged, but councils remain concerned that they won’t see the benefit of the £1.5 billion extra investment in social care until the end of the decade. Services caring for our elderly and vulnerable people are under pressure now.

“Having increased certainty over resources for more than one year will enable longer term planning, especially as 2016/17 looks set to be the toughest year of this four year Spending Review period for local services. While councils will strive to limit the impact on local communities they will face tough decisions about how to keep providing the hundreds of vital services which communities value and rely on to go about their daily lives, from keeping streets lit and clean to caring for our vulnerable children and adults.

“Today’s settlement has also proposed radical changes to the way council services are funded in the medium term. It’s vital that government continues to work closely with us to ensure the views of all councils are heard and understood in order to deliver sustainable financing of local government services.”