Many district councils look set to be forced to make cuts to essential community services, after Government funding for next year was announced.
Today’s provisional Local Government Finance Settlement reveals most of the 164 district councils, which represent 20 million people, are likely to get little or no real-terms rise in funding in 2025-26. Although district councils are promised a 0.3% cash increase, this is dependent upon council tax increases and does not reflect many of the rising costs councils face.
District councils – which provide many of the most visible local services including housing, waste collection, street cleaning, parks and leisure centres for 20 million people – have already faced a real-terms funding cut of 21% between 2010/11 and 2024/25.
They will be heavily dependent on the extra funding from the Extended Producer Responsibility for Packaging scheme, which is to be welcomed. However, this funding stream is designed to encourage manufacturers to shift to more environmentally-friendly packaging. If this goal succeeds, this funding source will substantially drop in the coming years.
DCN welcomes the 37% increase in the Homelessness Prevention Grant allocated to district councils. While this funding is a tangible boost to the work of councils facing the biggest growth in temporary accommodation costs, it is insufficient to strengthen all vital homelessness services. Councils need substantial extra funding to enhance their work to prevent homelessness from happening in the first place and to purchase more homes to house homeless families – both of which offer value for the taxpayer in the long run.
We also welcome the new Recovery Grant, which will benefit districts with severe financial problems, and the funding to help councils with increased National Insurance costs – but it is not yet clear whether this will be enough to fully cover councils’ costs especially where they have outsourced services.
The allocations announced today follow a policy statement earlier this month, which indicated there would be a shake-up in some of the funding streams upon which many district councils depend. Funding from the Rural Services Delivery Grant has been “repurposed” while the New Homes Bonus will be reformed beyond 2025-26. These changes could severely impact on the finances of many district councils.
In response to today’s Provisional Local Government Finance Settlement, Cllr Jeremy Newmark, Finance Spokesperson for the District Councils’ Network, said:
“Today’s settlement means little or no increase in funding for some or many district councils. There will inevitably be a knock-on impact on essential local services.
“District councils offer incredibly good value for money, with the total cost of providing our services amounting to an average of just £183 per resident. But, after 15 years of funding reductions, there are few if any cuts left to be made which will not lead to reductions in local services.
“We welcome today’s extra money for homelessness prevention. But we are concerned that overall the settlement does too little to help those district councils badly affected by the rise in homelessness and demand for expensive temporary accommodation – or to help councils end the scourge of homelessness once and for all.
“We are concerned that councils will be heavily dependent on funding from the Extended Producer Responsibility for Packaging scheme, which is designed to change manufacturers’ behaviour, rather than to be a central plank of councils’ funding. This is not sustainable. When packaging becomes more environmentally friendly – as it needs to – the danger is that funding for district councils withers.
“Rural councils, in particular, could be hit as funding is directed by the Government to more urban areas, inevitably impacting on the services received by rural communities. It costs more to provide services to sparsely populated areas and the funding system must continue to reflect this.
“The Government is bringing about radical changes in how councils are funded. This, coupled with the looming prospect of local government reorganisation, will lead to uncertainty for local council tax payers and service users. District councils will do what they can to protect their communities from turmoil. We’re keen to work with the Government to support our communities.
“We’re anxious to avoid cuts to essential local services as we seek to balance budgets but the fact is that for many communities some services will be cut – including those that create jobs, boost growth and prevent the need for expenditure in the NHS.”
