Secretary of State for Levelling Up, Housing and Communities
(): Today the Government has
published details on the Local Government Finance Settlement for
the next two years for English councils, which prioritises
protecting local tax payers and vital core services. Local
government has long called for greater certainty on funding
following repeated one-year settlements, greater local control of
finances, and a focus on social care. This two-year policy
statement delivers on all of these fronts.
The Government estimates that on average councils will see an
increase of around 9% in their funding next year. We have
delivered on the sector’s requests for additional funding through
the £2.8 billion announced at the Autumn Statement for social
care. We are also ensuring that this year’s Settlement provides
support across all tiers of local government through a new,
one-off funding guarantee that ensures all local authorities will
see a minimum 3% increase in their Core Spending Power before
taking any local decisions on council tax levels. Councils are
best placed to make local decisions to meet pressures and ensure
that our most vulnerable in society get the support they need,
and therefore it is for individual local authorities to determine
the level of flexibility they use in setting council tax. The
policy statement confirms a core referendum principle of up to 3%
for both 2023-24 and 2024-25.
The Government’s manifesto commits to continuing to protect local
taxpayers from excessive council tax increases, and it is for the
House of Commons to set an annual threshold at which a council
tax referendum is triggered. This is an additional local
democratic check and balance to avoid the repeat seen under the
last Labour Government when council tax more than doubled. This
package of referendum principles strikes a fair balance. The
council tax referendum provisions are not a cap, nor do they
force councils to set taxes at the threshold level. Councillors,
mayors, police and crime commissioners and local councils will
rightly want to consider the financial needs of local residents
at this challenging point in time, alongside the public’s support
for action on keeping our streets safe and providing key
services.
The Mayor of London has requested flexibility to levy an
additional £20 on Band D bills to the Greater London Authority
(GLA) precept to provide extra funding for Transport for London
(TfL). The Government has expressed ongoing concern about the
management of TfL by this Mayor, and it is disappointing that
London taxpayers are having to foot the bill for the GLA’s poor
governance and decision-making. Whilst the Government will not
oppose this request, any decision to increase the precept is
solely one for the Mayor, who should take into account the
pressures that Londoners are currently facing on living costs and
his decision to raise council tax by 9.5% last year.
This will be a settlement that also recognises the importance of
funding adult social care by confirming significant additional
funding for social care. Additionally, for social care
authorities, the Government will consult on a 2% precept, for
both 2023-24 and 2024-25. When taking decisions on council tax
levels, local authorities should recognise the pressures many
households are facing.
In addition, the policy statement has set out key assumptions
behind the second year of the settlement. This includes
confirming that the Review of Relative Needs and Resources and a
reset to Business Rates growth will not be implemented in the
next two years, to give councils more certainty for budget
planning. For 2024-25, the policy statement refers to the
significant new funding stream expected from the Extended
Producer Responsibility for packaging scheme.
Finally, we are encouraging local authorities to consider whether
they can use their reserves to maintain services in the face of
immediate inflationary pressures, taking account, of course, of
the need to maintain appropriate levels of reserves to support
councils’ financial sustainability and future investment. The
Government notes the significant increase in some local authority
reserves over the two years of the pandemic.
All of the proposals set out in the policy statement will be
subject to the usual consultation process within the Local
Government Finance Settlement.
This Written Ministerial Statement covers England only.
