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‘Well-run councils will have to make counterproductive cuts’

Published: 7 February 2024

The Chancellor has been urged to take targeted action to avoid counterproductive cuts to essential services at district councils.

District councils – the local authorities closest to communities across much of England – continue to feel acute financial pressure due to a sharp rise in demand for services, including housing, homelessness and support services that directly impact on the wider determinants of health, reducing the pressure on the NHS. All of these services have seen significantly higher demands and costs over recent years.

District Councils’ Network Chairman Cllr Sam Chapman-Allen has written to Jeremy Hunt, urging him to use his spring Budget to ensure DCN member councils remain sustainable so our communities can continue to depend on our services.

Cllr Chapman-Allen writes: “We are still at the point where well-run, responsible councils will likely have to make deep and counter-productive cuts to services to avert financial crisis. Despite planning to deliver around 10% in cuts and efficiency savings on average this year, many DCN councils will have significant budget gaps going into the new financial year. It is not right or prudent for councils to be expected routinely to plug shortfalls by using up financial reserves.

“It is clear to me and my members that more action is needed. Ahead of the Spring Budget, I would strongly call on you to explore further targeted support for district councils.”

Cllr Chapman-Allen calls for specific measures in two areas:


DCN is seeking an increase in the Housing Benefit subsidy rate that local authorities can claim for temporary accommodation.

This is currently tied to 2011 rates and DCN councils can only claim an average of £109 a week for nightly accommodation. This leaves councils with a large shortfall which they must fill themselves, leaving less money available for other services.

Cllr Chapman-Allen is calling for the subsidy cap to be increased to 90% of market rent.

“Some district councils now spend millions of pounds a year on temporary accommodation. In some cases this is between 20% and 50% of their total net budget. The spiralling increase in demand and cost means that well-run councils are now struggling to balance the books. It is threatening to push councils into financial distress,” he writes.

“The uplift to Local Housing Allowance (LHA) rates you announced in the Autumn Statement was very welcome. Unfortunately it will not be enough to meet the scale of the challenge we face. I believe you could act in a targeted way to give more support for these important services in a way that will be good value for the taxpayer. Equipping councils with the means to provide decent-quality accommodation for people experiencing homelessness will help to prevent their situation deteriorating further and requiring more expensive interventions by the state.”

Preventative services

Many district council services help prevent personal crises, for instance by averting homelessness or hospital stays. As well as helping often vulnerable people, they lead to significant amounts of money saved across the rest of the public sector.

Such services include leisure and wellbeing services, social prescribing, homelessness prevention, housing and planning, economic development, community outreach and parks and green spaces.

To give one example, a district council service expediting discharges in two Norfolk hospitals is estimated to have saved 12,790 bed days at a value of more than £8.5 million over the last year.

Cllr Chapman-Allen writes: “Financial pressures mean that many of these services are now at risk. The extra funding in the Local Government Finance Settlement will go some way to lessen the impact. But many councils have been forced to make cuts to these services. For instance, over half of DCN member councils are now having to make cuts to leisure and wellbeing services.

“It is my firm view that failing to provide additional support will be counter-productive and cause greater cost for the Exchequer in the longer term. There is a compelling invest-to-save case for providing extra support to the value-adding, preventative services delivered by districts and other parts of local government. This would be for the benefit for the whole of local government and for the taxpayer.”

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