Councils in England will face a funding gap of more than £5
billion by 2024 to maintain services at current levels.
This figure could double amid the huge economic and societal
uncertainty caused by the COVID-19 pandemic.
The Local Government Association (LGA) has set out in its
Comprehensive Spending Review (CSR) submission how £10 billion is
needed to not only plug this gap but meet growing demand
pressures and improve services for communities.
The LGA said the Government’s first CSR in more than a decade
must provide sustainable and certain long-term funding to
councils, bring power and resources closer to people and finally
begin cross-party work to provide a sustainable, long-term
funding solution for adult social care services.
It comes as councils continue to demonstrate their vital role as
local leaders by working tirelessly to protect the most
vulnerable, support businesses and continue to deliver vital
services as we enter the next phase of this pandemic.
The LGA’s detailed and ambitious submission to the Treasury shows
how with the right powers, sustainable funding, and enhanced
flexibilities councils can continue this vital work and ensure
our communities are able to prosper in the future.
Many councils were in a difficult financial position before the
pandemic hit after a decade of central government funding
reductions. They will continue to face spiralling demand
pressures on day-to-day services - some pre-existing and others
made more significant by the impact of COVID-19 – amid
substantial income losses, such as from local taxation, fees and
charges.
The Government has provided some much-needed support, but
significant challenges remain. It is vital that the Government
addresses in full the financial challenges facing councils as a
result of COVID-19, including all lost income and local tax
losses.
The LGA has used its submission to set out the need for the
Chancellor to use the CSR to provide an additional £10.1 billion
per year in core funding to councils in England by 2023/24. This
is made up of:
a funding gap facing councils in England of £5.3 billion by
2023/24. This is just to maintain services at today’s level. This
gap, which could double due to the uncertainty resulting from the
continued impact of COVID-19, assumes annual 2 per cent council
tax increases and inflation-linked growth in grants.
£1.9 billion for services struggling under increased demand. For
example, in children’s social care and homelessness services
where councils have had to overspend on budgets in recent years
to try and cope.
However, councils are ambitious to go beyond just managing the
current challenging state of local finances and services and need
to be able to play a leading role in helping communities recover
and rebuild after the pandemic. The LGA’s submission sets out how
a further £2.9 billion could be used by councils to help improve
services and reduce inequalities. This includes investment in
early intervention and prevention, reforming adult social care
pay, boosting connectivity, improving parks and green spaces and
more.
Councils stand ready to provide local solutions to the national
challenges we face. For this to happen, the Government needs to
use the CSR to radially re-think public spending in a way that is
fit for the future and empowers councils to deliver on the
ambition for our communities that central and local government
share.
A three-year CSR also presents an opportunity to move away from
councils only being able to set short-term budgets.
The LGA is urging the Government to also commit to a three-year
local government finance settlement this year to cover general
grant funding, specific funding such as the public health grant
and council tax flexibilities. This needs to be accompanied by a
four-year settlement for consolidated capital investment to match
the Chancellor’s timeframe for investment.
Cllr James Jamieson, LGA Chairman, said:
“The pandemic has shone a light on the highly valued services
councils provide - including public health, adult social care,
children’s services, homelessness support, and help for those in
financial hardship.
“Councils are focused on supporting communities through this
crisis and beyond as we look to rebuild our economy, get people
back to work and level up inequalities. That is why the first
Comprehensive Spending Review in more than a decade will shape
the direction of this country for years to come.
“Securing the immediate and long-term sustainability of local
services must be the top priority.
“The ambition of councils goes way beyond just maintaining
services the way they are today. We want to create new hope in
our communities.
"With the right funding and freedoms, councils can improve the
lives of their residents, address the stark inequalities the
pandemic has exposed, develop a green recovery, address skills
gaps and rebuild the economy so that it benefits everyone.”
