Final settlement insufficient to deal with long-term pressures, say industry executives

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The final settlement of local government finances, confirmed last night, will see councils receive a ‘real terms increase of over 4.5 per cent’ on last year, Communities Secretary Michael Gove has said.

However, industry leaders have warned the settlement – to which the Department for Levels, Housing and Communities will give councils ‘access to a £54.1billion share’ – will not be enough to do in the face of the long-term pressures facing the sector.

The full increase in basic purchasing power depends on councils raising council tax by the maximum possible amount – and this comes at a time when the rate of inflation has reached 5.4%.

Rob Whiteman, chief executive of the Chartered Institute of Public Finance & Accountancy, told LGC “for all intents and purposes this is the settlement we expected”, but cautioned that all details would need to be studied closely.

“It still appears to be an increase in real terms, but we won’t know until the finance departments detail what the full announcement means for the sector,” Ms. Whiteman.

“There may still be hidden additional charges or technical adjustments in the full version of the regulations that could impact this.”

The public health grant, which was also released earlier this week, has been criticized for claiming to be a real-term increase for the councils, disregarding rising inflation and growing pressures.

Local Government Association chairman James Jamieson (Con) said: ‘It is disappointing that the government has not acted on our call for the final settlement to include additional funding to address the existing pressures that are faced by our local services, particularly in social care for adults and children.

“With the coming years ahead set to be challenging, it is crucial that local services have a sustainable long-term future that gives councils certainty of their funding.”

District Councils Network finance spokeswoman Sharon Taylor (Lab) welcomed the confirmation of the one-time £822m services grant and the preservation of the bonus for new homes, both of which have been mentioned in the December draft financial regulation.

“However, we would like to have secured more funding and greater municipal tax flexibilities,” said Cllr Taylor. “There is still a significant gap between the funding being made available and the inflationary pressures our councils are facing. All DCN councils will face tough choices, but will continue to focus on delivering the best possible service to our residents. and our businesses.”

Mr Whiteman echoed concerns over long-term funding, saying that while most councils could get through 2022-23, “there is clear pressure coming [down the line]”.

“What appears to be an increase in real terms is preloaded, and the silver is stable later,” he said.

“The pressures on services are going to be enormous. So, in a way, what’s in the final settlement doesn’t make a difference. These are marginal changes from what we already know.

“The big picture for local government is that this is a settlement that will get them through the whole next year. But there is a cliff edge where councils need to balance the books for 2023-24. »

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