The Local Government Finance Settlement is the annual determination of funding to local government from central government. The provisional Settlement for 2020/21 was published on 20 December 2019.
- We welcome the publication of the Final Local Government Finance Settlement, which gives councils much of the certainty they need about how local services will be funded in the coming year. We are pleased that the Government listened to our calls and published the final Settlement before the February recess.
- The Settlement indicates that core spending on local services has the potential to increase by £2.9 billion over the next year, which is good news for councils. The further addition of over £780 million to the high needs block of dedicated schools grant to fund the rising costs of meeting special educational needs brings the total of potential additional resources to over £3.5 billion, as announced in last year’s Spending Round.
- The Settlement includes an additional £1 billion of central government funding for social care, as announced in the 2019 Spending Round. Confirmation that key social care grants will also continue next year provides stability for councils. The ability of councils to increase council tax and levy an adult social care precept offers the potential to raise £1.6 billion. This will help councils to continue to deliver vital services, but it is not a sustainable solution. The Government needs to deliver on its pledge to bring forward proposals for long term reform of adult social care and how it is funded. The LGA, as a cross-party organisation, has previously offered to host and facilitate cross-party talks and that offer remains open to the Government.
- The National Living Wage was increased by 6.2 per cent on 31 December 2019.[ii] Whilst councils welcome this increase, it will add additional cost pressures on councils estimated at £220 million more than they will have been forecasting in adult social care alone. Additional funding should be provided to councils for this pressure.
- We are pleased that the 2019 Spending Round the Government announced a real-terms increase in the public health budget. We call on the Government to provide councils with clarity on the funding available in 2020/21 as soon as possible by publishing the 2020/21 grant allocations for councils.
- Councils also need urgent clarity on the Government’s plans for its Fair Funding Review and further business rates retention. With implementation scheduled for April 2021, it is crucial for local authority financial planning that the Government consults on proposals for reform and provides certainty to councils as soon as possible.
- The Government has confirmed the referendum limits for 2020/21. We continue to call for a 3 per cent core threshold as in previous years, as opposed to a 2 per cent threshold. We agree that districts should have the extra flexibility of a £5 increase but this should be the higher of 3 per cent or £5 given that this is a “rollover” settlement. Fire authorities should also have access to this flexibility.
- We will continue to promote the role councils play in making a huge difference to the lives of our residents and communities. We look forward to working with the Government as a vital partner to help deliver its commitment to levelling up powers and investment in local areas in the run up to the Spending Review later this year.