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Local Government Finance Settlement: Critical services are on the brink due to inadequate funding

Published: 19 December 2023

Today’s Provisional Local Government Finance Settlement has prompted significant concerns about the future of vital district council services.

The District Councils’ Network has reacted to the statement by Levelling Up Secretary Michael Gove on 2024-25 council funding by warning of likely service reductions.

The Government today confirmed that spending power would rise by a minimum 3% for district councils before taking council tax increases into account. This is nowhere near enough to compensate for an unprecedented growth in demand for temporary accommodation, the prolonged period of high inflation and the increase in the National Living Wage, as well as the fact that many councils are already financially stretched to their limit.

District Councils’ Network Chairman Cllr Sam Chapman Allen said: “Critical services, essential for our most vulnerable people in our community, are on the brink due to inadequate funding from the Government.

“Today’s settlement falls well short of stemming the acute financial pressures for district councils resulting from the 15% real-terms spending squeeze since 2015, rapid growth in demand for temporary accommodation, and prolonged steep cost and pay inflation.

“This financial shortfall endangers district councils’ provision of crucial support such as housing for the homeless and leisure centres’ work to tackle health inequality. These services not only benefit local communities but also alleviate pressure on other parts of the public sector, including the NHS and social care. The Government’s lack of substantial new support for district councils is short-sighted and will lead to greater financial burdens on the taxpayer in the future.

“Faced with this provisional settlement, we regret that many councils may have no choice but to scale back or shut down key services, something we deeply regret. The result is likely to be a reduced level of support for vulnerable individuals and a decline in the public realm in towns and cities across England, all due to the Government’s inadequate funding.

“Councils have been pushing hard to find savings and efficiencies without making painful cuts to important services.  The limits of such measures have now been reached.

“We urge the Government to reconsider and provide substantial additional funding, especially for temporary housing for those at risk of homelessness – a sector where our funding is drastically lagging behind the growth in demand. We also seek the freedoms and flexibility to set local council tax, fees, and charges at levels that meet our community needs.

“A fundamental overhaul of local government funding is necessary so councils have greater financial independence from annual government allocations, which currently are short-term and unsustainable. Looking ahead, it’s vital to re-evaluate the balance of funding, focusing more on preventive services as part of broader public service reforms.”

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