Council funding to be halved over next two years

The Local Government Association (LGA) has warned that councils in England will see core central government funding cut in half over the next two years.

The body is urging the government to use the upcoming Local Government Finance Settlement to provide replacement funding to all councils in 2018/19 and 2019/20 to help authorities maintain vital services like bin collections, road maintenance and protecting children and the elderly.

This call includes reducing the pace of reductions of core grant funding to all councils in 2018/19 and 2019/20 and clarifying its intention to allow local government as a whole to keep all of the business rates income it collects.

Furthermore, in light of the urgent need for a fairer system of distributing funding between councils, the government should publish its planned Fair Funding Review consultation and confirm the date of when it will be implemented and abolish council tax referendum limits - fully funding the restructuring of the local government pay spine necessary to manage increases in the National Living Wage over the next two years.

Councils say that their central government funding will be further cut by 54 per cent between 2018/19 and 2019/20, likely to be approximately £2.7 billion. Almost half of all councils will no longer receive this form of government funding by 2019/20, instead having to give some extra business rates income back to the government.

Nick Forbes, LGA senior vice chair, said: “Councils are faced with the double jeopardy not only the money they have to pay for local services running out fast but also huge uncertainty about future funding after 2020. Councils face an overall £5.8 billion funding gap in just two years yet the Budget disappointingly offered nothing to ease the financial pressure on local services. Our communities and the local services they rely on cannot take another two years of funding cuts with no solution in sight. The Local Government Finance Settlement must put this right.

“Smoothing out funding cuts over the next few years, introducing a fairer funding system and allowing local government to keep every penny of business rates collected to plug funding gaps is now the only way the government can ensure local authorities are able to protect the services communities rely on over the next few years.”