Jeremy Newmark, the finance spokesperson for District Councils’ Network (DCN), argues that properly funded councils are essential to ministers hitting their goals.

Rachel Reeves certainly cannot be accused of being ambiguous in her messaging: we all know that money is tight and there will be no splurge by the Chancellor.

This clarity, whilst welcome, doesn’t make life much easier for us council leaders who are contemplating the task of setting next year’s budgets. Demand for services has risen more quickly than our funding and without action something must give.

The District Councils’ Network, for which I am finance spokesperson, will be making the case that without new funding some councils could financially collapse and our councils’ impact on achieving the Government’s national goals will be diminished. But, in addition to this, there is plenty ministers can do that will have zero impact on the Exchequer but will still nevertheless help us to protect local services.

District councils face an unprecedented crisis in temporary accommodation with 21% less spending power in real terms than we had in 2010. Though inflation peaked last year, higher wages and contract inflation continue to grow well beyond our income.

A flat cash settlement would be insufficient to prevent districts from making bruising cuts. Looking at my own budget at Hertsmere Council, it’s hard to envisage how we can make any further savings on our £20m budget without making the services residents rely on less agile. The low-hanging fruit had been plucked long before I became leader in 2023. Our senior officer complement has been left with no flesh on the bones. The loss of wisdom and expertise, with remaining senior officers left insufficiently supported, creates significant additional risk.

If existing funding is maintained, district councils envisage an average funding shortfall of 7% next year, necessitating cuts of at least 4%, on top of the many other cuts of the past decade or so.

For many councils, it is temporary accommodation which is the biggest threat to sustainability. Districts’ spending on it has risen by a third in just a year amid unprecedented pressure. Housing benefit subsidy continues to be set at 2011 levels – woefully insufficient to cover today’s temporary accommodation costs. This has the potential to force some districts to issue a section 114 notice, with a devastating impact on all local services.

Meanwhile, growing wage costs are a worry. Districts anticipate they will add an average £2m to our costs over the next three years. Rising costs are driven mostly by the national living wage, and we need either greater grant funding or increased local flexibility to compensate for it. While the bottom line is that while we do need additional money, there is much that ministers can do that costs the Government nothing. While a multi-year settlement would offer us stability, we do appreciate the reasons why this may not be forthcoming this time around. But a commitment not to tinker with the funding system next year would give us some certainty. New homes bonus, business rates growth and the funding guarantee contribute one fifth of districts’ spending power and their loss or diminishment could be devastating to the sector.

We also need clarity around what happens to the UK Shared Prosperity Fund and Household Support Fund from 31 March next year. The valuable services and staff these funds support face a cliff edge which many districts cannot bridge.

Districts could raise a lot more income locally at a minimal cost to the Treasury. We receive less than 10% of the average council tax bill but are stuck with unfair referendum limits which don’t keep pace with the increasing cost of the services we provide.

The ability to raise council tax by £15 – like the police services’ cap for the last two years – could provide districts with a collective funding boost of up to £180m. This would cost households only £21 a year on average but give districts a 7% increase in our spending power.

Giving all councils the right to set planning and licensing fees to cover the cost of providing services would provide fairness to council tax payers, rather than provide an unnecessary subsidy. Meanwhile, in many places, powers to tax short-term rental properties would help fund at least some of the housing problems they are causing.

I appreciate that there is an impact on local communities from seeking to increase a council’s income. And that there is an impact on the national balance sheet of the Government increasing councils’ funding. However, my strong message to the Government is that the negative consequences of not taking these measures are even greater. Local services will be diminished and our ability to support both national Government and our public sector partners will be diminished without significant changes.

To survive we will have no option but to cut discretionary and preventative services which save money for the rest of the public sector. Parks and leisure services improve population health, reducing the NHS’s burden, while housing services also boost health and wellbeing. Local economic development expertise creates jobs and growth. Waste minimisation programmes save our county colleagues millions on waste disposal. And planning services are integral to easing the housing crisis by bringing about communities in which people want to live. Such services are integral to the Government achieving its missions.

The value of district councils goes well beyond the benefit of our services to residents. The districts lead the sector when it comes to bang for the buck. The Government will be as much of a loser as our communities unless we receive proper support. Weaker councils mean a weaker local input to the Government achieving its goals.