Ellie Ames 29 February 2024

Councils set for £2.5bn in exceptional financial support

Councils set for £2.5bn in exceptional financial support image
Image: gov.uk

The Department for Levelling Up, Housing and Communities (DLUHC) has agreed to grant 19 local authorities ‘in principle’ capitalisation directions worth almost £2.5bn.

Capitalisation directions worth £1.5bn have been agreed for the 19 authorities for 2024-25, with support for 2023-24 also agreed for 11 of the councils.

More than £1.2bn has been agreed for Birmingham City Council alone, with £685m for 2024-25 and a further £570m covering 2020-23.

The chair of the Special Interest Group of Municipal Authorities (SIGOMA), Sir Stephen Houghton, said the extent of the agreed support reveals the ‘extraordinary’ financial crisis facing local government.

He added: ‘This exceptional financial support will be welcome as a stopgap for those councils that have applied, but will not provide a long-term solution, solve the current systemic issues in local government finances or stop councils from having to make severe cuts in services.’

The chief executive of the Local Government Information Unit, Jonathan Carr-West, said: ‘We know how desperate these councils were to receive this exceptional support. For them, it is a last-minute reprieve that wards off immediate financial collapse.’

He added: ‘But we should not mistake this for generosity on the part of the Government.

'They are simply allowing councils to borrow and to sell their own assets. We should not mistake [this] announcement for a sustainable long-term solution to local government funding.’

A DLUHC spokesperson said: ‘This is about having a pragmatic approach and agreeing financial flexibilities with a small number of councils – as we have done in previous years – to help them balance their budgets and deliver vital services.

‘Nearly three quarters of the support announced this year relates to six councils where there has been severe local failure, forcing the Government to step in and take action through statutory intervention.’

The councils set to receive financial support are: 

  • Birmingham
  • Bradford
  • Cheshire East
  • Croydon
  • Cumberland
  • Eastbourne
  • Havering
  • Medway
  • Middlesbrough
  • North Northamptonshire
  • Nottingham
  • Plymouth
  • Slough
  • Somerset
  • Southampton
  • Stoke-on-Trent
  • Thurrock
  • West Northamptonshire
  • Woking

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