DCN responds to Policy Statement on Local Government Finance: ‘A step forward but difficult choices remain for district councils’
District council budgets remain under pressure after the government announced some of its plans in advance of the local government finance settlement.
Today’s finance policy statement contained good news that all councils will be guaranteed an increase of at least 3% in their spending power next year. On top of the previously announced flexibility for district councils to raise council tax by 3%, this goes some way to addressing the budget gap that all councils are confronting.
However, it still means district councils face a real-terms cut in their spending power next year as inflation outstrips the new funding support. This comes at a time when demand for a range of important services, such as housing support and homelessness prevention, is rising. Income from fees and charges remains below pre-pandemic levels.
Before today, district councils had warned they faced a collective funding gap of at least £500m in 2023-24. That’s equivalent to almost 15% of their net budget. The new support announced today is welcome but only covers a small proportion of the gap.
Many councils still face tough choices about cutting back vital services which matter to all local residents. These could include:
- Support services which help people avoid crisis, for instance homelessness, and avert the need for expensive public sector spending later on
- Work to drive economic growth, create jobs and bring in new community investment
- Universal services which contribute to quality of life and the health and wellbeing of communities, such as parks, waste collection, leisure services and community support.
The DCN is calling on the government to go further to protect services that act as a lifeline to residents, businesses and whole communities. The government should press ahead immediately with its proposed increases to planning application fees. It should also offer further council tax flexibility by raising the maximum cash increase from £5 to £10 per year. That flexibility would add a maximum of only 8p a week to the average Band D bill in shire county areas, even if all districts took advantage of it.
Beyond next year, the DCN is pleased that the government has taken steps to provide more certainty about funding. In such difficult times, the last thing hard-pressed councils need is the prospect of fundamental change to their funding model. It is positive that there will be no business rates re-set for the next two years. We need similar certainty about the New Homes Bonus, which is currently guaranteed only for 2023-24. But overall we need a funding model for local government which provides long-term and sustainable funding.
The DCN is also closely monitoring the government’s waste policies, including the potential introduction of Extended Producer Responsibility in 2024-25. The DCN calls on the Government to make sure that any reassessment of funding resulting from this does not lead to any net reduction in funding to district councils. It must also fully factor in the significant costs of waste consistency reform, which could result in councils having to make considerable investment in their waste infrastructure including new vehicle fleets and bins.
District Councils’ Network vice chair and finance spokesperson Baroness Sharon Taylor, leader of Stevenage Borough Council, said:
“The Government has clearly recognised that district councils need additional resources to underpin the vital frontline services we deliver to our local communities.
“The extra spending power is a step in the right direction. But, even with the council tax flexibility announced in the Autumn Statement, it will not remove the difficult choices that so many council leaders face. Inflation continues to race ahead and escalating demand for our services means that our councils’ budget gaps will grow next year.
“We are calling on the government to build on this, enter into a dialogue with us about the pressures we are facing and go further to support us. The increases to planning application fees it proposed earlier this year should be implemented immediately. This simple step would make a big difference and help to safeguard our economic development work with the positive impact it has on local jobs and growth. The government should also provide additional flexibility on council tax, trusting democratically elected local leaders to make the choices that are right for their communities.
“Our councils provide much valued services to 100% of local residents. These services have been seen by our communities as the fourth emergency service during Covid and the cost-of-living crisis and they have never been more needed. They improve everyone’s quality of life. They save money for the NHS and the taxpayer. It really is everyone’s interests that we do everything we can to protect them.”