LGA: Local services will cost at least £8bn more by 2024 which cannot be funded by council tax alone

Councils in England face extra cost pressures of almost £8 billion by 2024/25 just to keep vital local services running at today’s levels, analysis by the Local Government Association warns ahead of the Spending Review.

This total is about addressing new pressures that will face councils in the next three years, it does not include the very real pressures that councils are facing here and now such as paying care workers a fair wage or investing in the early intervention services which help families and young people falling into crisis.

Faced with these significant spending pressures over the next few years, the LGA is warning that vital services, such as care for older and disabled people, child protection, homelessness prevention, waste and recycling, and road maintenance, continue to face an uncertain future as a result.

The LGA said the significant financial pressures facing local services cannot be met by council tax income alone. To illustrate the scale of these extra demand and cost pressures facing councils, the LGA projects that council tax income would need to rise by a quarter over the next three years to pay for them.

Councils are particularly alarmed that the Government’s s solution for tackling social care’s core existing pressures appears to be solely through the use of council tax, and the social care precept.

There is no additional funding for frontline social care from the estimated £36 billion to be raised by the new UK-wide Health and Social Care levy over the next three years. However, addressing the NHS backlog and freeing up hospital beds cannot be done without also fixing social care. The LGA said the Government needs to commit to a greater share of the Levy to go to frontline social care from the outset.

The LGA’s detailed submission to this month’s Treasury Spending Review is calling for the Spending Review to provide councils with a multi-year settlement which provides sufficient additional government funding and certainty to meet growing cost pressures and existing challenges. It would also enable councils to plan local services more efficiently and help reduce pressures on the rest of the public sector.

The Spending Review also presents an opportunity to reset public spending in a way that is fit for the future, flexible to allow the delivery of local priorities, and empowers councils to deliver on the ambition to level up our communities that central and local government share.

Councils are also therefore calling on the Government to use the Spending Review to create an ongoing Community Investment Fund, worth £1 billion in 2022/23. This unringfenced fund could be used by councils to invest in supporting individuals, strengthening communities, and tackling priorities in their local areas, including health inequalities - all of which will be vital to levelling up across the country.

However, the LGA submission is not just about money but sets out how devolving and empowering local government in areas such as education, special educational needs and disabilities (SEND), skills and planning can deliver more for our residents and communities.

There is clear and significant evidence that outcomes improve and the country gets better value for money when councils have the freedoms and funding to make local decisions. Bringing power and existing resources closer to people is the key to improving lives, tackling deep set inequalities and building inclusive growth across the country.

Cllr James Jamieson, LGA Chairman, said:

“Councils continue to face severe funding and demand pressures that will stretch the local services our communities rely on to the limit. Securing the long-term sustainability of local services must therefore be the top priority in the Spending Review.

“If we are to come out of this pandemic with a society that is truly levelled up, the vital services that councils provide must be at the heart of it. Councils need certainty over their medium-term finances, adequate funding to tackle day-to-day pressures and long-term investment in people and transforming places across all parts of the country to turn levelling up from a political slogan to a reality that leads to real change for people’s lives.

“Levelling up has to also mean a radical reset of the relationship between central and local - building back better means building back local. With adequate resources and freedoms, councils can continue to provide local solutions to the national challenges we face and ensure all of our communities are able to prosper in the future.”

NOTES TO EDITORS

1. LGA analysis estimates the average increase in annual cost pressures facing councils of £2.6 billion per year to maintain services at their current level of access and quality, meaning that the same services will cost around £7.8 billion more to provide in three years’ time. Of this, £1.1 billion per year is related to adult social care (in addition to a pre-existing £1.5 billion provider market pressure), £0.6 billion to children’s social care and £0.9 billion to all other council services (excluding education and police/fire services).

Table 1: Projected total net expenditure by service area 2021/22 to 2024/25

1. In recent years, the Government has relied on council tax raising powers to increase councils’ core spending power. While council tax is an important funding stream, it has never been the solution to the long-term pressures facing councils, raising different amounts in different parts of the country – unrelated to need - and adding to the financial pressures facing households.