William Eichler 25 February 2020

Jenrick announces over £49bn funding package for councils

Jenrick announces over £49bn funding package for councils image

Local government secretary Robert Jenrick has confirmed a multi-million pound funding package for councils in what the Government says is the ‘biggest real-terms increase in spending power in a decade’.

Following a vote in the House of Commons, the Government has confirmed councils in England will have access to a share of £49.2bn in 2020 to 2021, an increase of £2.9bn or 4.4% in real-terms.

The package includes £1bn of new social care grant funding, a continuation of all existing social care grants, and the ability for authorities to raise up to £500m more for adult social care.

It also includes a commitment to redistribute £40m of business rates income to councils on the basis of assessed need, and a promise to protect core funding and ‘prevent excessive’ council tax rises.

The Government has committed £907m to continue the New Homes Bonus scheme in 2020 to 2021 and will maintain last year’s Rural Services Delivery Grant at £81m.

‘This Government is committed to levelling up every part of the country, investing in every region and giving communities control over making the decisions which are right for them,’ said Mr Jenrick.

‘That’s why we’re confirming the biggest increase in councils’ spending power for a decade across England, while protecting residents from excessive rises in council tax.’

Provisional plans for the local government finance settlement for 2020 to 2021 were published in December, followed by a period of consultation with the sector which elicited 158 responses.

The consultation revealed majority support for the Government’s proposals to uprate Revenue Support Grant, with 117 (85%) in favour.

There was a slim majority (62%) of support for the proposal to eliminate negative Revenue Support Grant (RSG) via forgone business rates receipts. The majority of those against this argued that available resources should be distributed on the basis of need.

The settlement will maintain the core principle of a council tax referendum on increases over 2%. This was opposed by 70% of respondents, 69% of which argued a referendum principle should be abolished entirely.

The Government’s social care proposals were supported by 96 out of 115 (83%) respondents. However, 24 of the 96 opposed the methodology for distributing the funds and the 16 who opposed the proposed social care settlement in its entirety said it was not enough to meet demand.

Overall, there were 60 (45%) respondents who disagreed with the Government’s New Homes Bonus proposals. Eighteen of these respondents argued that the money used to fund the bonus should instead be used for other funding pressures.

Responses to the Rural Services Delivery Grant were evenly split at 48% each.

Responding to the announcement, a spokesperson for the Local Government Association (LGA) said: 'Extra funding for social care this year, council-tax raising powers and the continuation of key social care grants, will help ensure councils can continue to help older and disabled people live more independently and support our most vulnerable young people.

'But this is only a one-year settlement. Councils have faced an unprecedented period of funding and demand pressures that have stretched local services to the limit.

'The Budget and Spending Review to a funding settlement that allows councils to improve services and not just keep them going.'

CIPFA CEO, Rob Whiteman, said: 'We welcome any increase to local government spending power, but more annual injections of cash will not combat the underlying impact of a decade of austerity or solve the social care crisis.

'With a third of the money for social care coming from the council tax precept, local authorities will be disappointed in the government's suggestion they will not need to put up their council tax in line with previous years. Respectfully, we say that’s complete nonsense. It might make a good headline, but sadly just isn’t true.'

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