MP (Secretary of State for
Housing, Communities and Local Government): Today I
laid before the House the ‘Local Government Finance Report
(England) 2020-21’, the ‘Referendums Relating to Council Tax
Increases (Principles) (England) Report 2020-21’ and the
‘Referendums Relating to Council Tax Increases (Alternative
Notional Amounts) (England) Report 2020-21’, which represent
the final local government
finance settlement for 2020-21.
This year’s settlement delivers an increase in Core Spending
Power from £46.2 billion in 2019-20 to £49.2 billion in 2020-21.
In real terms this is a 4.4% increase and the largest year on
year real terms increase in a decade.
The local government finance settlement relies on collaboration.
My ministers and I have engaged extensively with the sector,
holding meetings with representative groups, with councils, and
with MPs.
During this process, we received over 200 representations from
organisations or individuals, and these have been carefully
considered before finalising the settlement.
I would like to take this opportunity to thank all colleagues in
the House, and council leaders and officers, who have contributed
to the consultation process.
This year’s settlement is a strong and well-balanced package,
that delivers significant extra resources to the priority areas
of adult and children’s social care, whilst protecting other
vital service areas.
This government is serious about protecting the millions of
people that rely upon adult and children’s social care in their
daily lives. To do this, this settlement will allow local
authorities to access an additional £1.5 billion for social care.
This comprises £1 billion of additional grant – for both adult
and children’s social care – and a proposed 2% council tax
precept for adult social care, which will enable councils to
access a further £500 million.
£150 million of the additional grant will be used to equalise the
distributional impact of the adult social care council tax
precept.
These additional resources sit on top of the existing social care
package, which will continue at 2019-20 levels, and mean that
local authorities will have access to almost £6 billion of
dedicated funding across adult and children’s social care in
2020-21.
Core settlement resources
The local government finance settlement for 2020-21 will also
protect other key services by providing a uniform percentage
uplift in core settlement resources, in line with the change in
the small business rates multiplier. Vital services are also
protected by continuing other key grants from 2019-20.
Council tax
Local authorities will continue to be able to increase council
tax in 2020-21 by a core principle of up to 2%, without holding a
local referendum, with a bespoke council tax referendum principle
of 2% or £5, whichever is higher, for shire district councils,
and a £10 Band D council tax referendum principle for all police
authorities.
Authorities with adult social care responsibilities will be able
to increase their council tax by a further 2% on top of the core
principle, without holding a local referendum, to be spent
exclusively on adult social care.
The proposed referendum principles strike a balance between
giving local authorities the flexibility to address service
pressures, and not overburdening council tax payers with
excessive increases which do not have local support.
The 2020-21 final local government finance settlement will mean
that the expected average council tax increase for 2020-21 will
be the lowest since 2016.
New Homes Bonus
The government will be making a new round of allocations of the
New Homes Bonus for 2020-21, amounting to £907 million.
As part of this, I am committing an additional £7 million to
maintain the growth baseline for payments at 0.4%. We will make
no legacy payments on these new allocations, but the government
will make legacy payments on allocations made in earlier years
which are due to be paid in 2020-21.
In order to ensure that the New Homes Bonus is focussed on
incentivising homes where they are needed most, I am announcing
that the government will consult on the future of the housing
incentive in the Spring. This will include moving to a new, more
targeted approach that rewards local authorities where they are
ambitious in delivering the homes we need.
Rural Services Delivery Grant
We will continue to recognise the extra costs of delivering
services in rural areas and propose to maintain last year’s Rural
Services Delivery Grant of £81 million, which is the
joint-highest paid to date.
It will be distributed using the same methodology as in 2019-20,
which allocated funding to the top quartile of local authorities
on the ‘super-sparsity’ indicator.
Conclusion
This settlement acts as the foundation for a robust and resilient
future for local government finance, delivering on calls for
certainty and stability from local government.
For those who deliver key front-line services, it provides
significant extra resources where they are needed most.
I look forward to debating this topic with all MPs next week.
