Government lays out provisional local government finance settlement

The government has proposed a funding package worth over £64 billion to support councils in England to deliver frontline services.

The provisional local government finance settlement makes available almost £4 billion more funding for councils in England in 2024-25, which is an increase of 6.5 per cent on 2023-24.

The Funding Guarantee introduced last year will be maintained to ensure every council in England sees at least a 3 per cent increase in Core Spending Power before any local decisions are made around council tax.

The government is also making available £1 billion in additional grant funding for social care in 2024-25 compared to 2023-24.

Councils will be able to increase council tax by up to 3 per cent without a local referendum with a further 2 per cent for those responsible for adult social care services, with additional flexibilities for some authorities.

Levelling up secretary Michael Gove said: "Councils are the backbone of their communities and carry out tremendous work every day in delivering vital services to the people they serve.  

"We recognise they are facing challenges and that is why we have announced a £64 billion funding package to ensure they can continue making a difference, including through our combined efforts to level up.

Minister for local government Simon Hoare said: "It is good news for our local government sector that we are presenting an above-inflation increase in funding.   

"We are, and will, continue to work alongside councils to ensure quality and reliable services are provided to those who need and use them, while also keeping a weather eye on ensuring value for the taxpayer."

The provisional finance settlement includes a funding package for councils worth more than £64.1 billion for the next financial year. The most relatively deprived areas of England will receive 18% more per dwelling in available resource through this settlement than the least deprived areas.

The consultation on the provisional settlement will be open for four weeks, closing on 15 January 2024.

Responding to the announcement, Cllr Shaun Davies, chair of the Local Government Association, said: “The funding uplift announced by the Government today assumes that all councils will increase their council tax bills by the maximum allowed in 2024/25. This means councils are again left facing the difficult choice about raising bills to bring in desperately needed funding.

“Today’s settlement does not provide enough funding to meet the severe cost and demand pressures which have left councils of all political colours and types warning of the serious challenges they face to set balanced budgets next year. Councils in England continue to face a funding gap of £4 billion over the next two years as today’s announcement does not change the funding gap facing councils this year and next.

“It is therefore unthinkable that government has not provided desperately needed new funding for local services in 2024/25. Although councils are working hard to reduce costs where possible, this means the local services our communities rely on every day are now exposed to further cuts.

“No council is now immune to the growing risk to their financial sustainability. The Government urgently needs to address the growing financial crisis facing councils and come up with a long-term plan to sufficiently fund local services through multi-year settlements."

Cllr Sir Stephen Houghton, chair of the Special interest Group of Municipal Authorities (SIGOMA) said: "Today’s funding increase will not match inflationary and demand-led pressures. In our letter to the PM, we warned that half of the increase comes from assumed council tax increases which are regressive and raise funding in a way unrelated to need. There is nothing new to address the funding pressures in children’s services, the biggest pressure our members currently face. Council finances will remain on a knife edge until funding levels are returned to a sustainable level and the distribution is fairer, fully recognising need. The final settlement in late January is now the Government’s last opportunity to provide councils with the funding and flexibility they need to stabilise their finances. If this is not done then there will be a surge of Section 114s next year."