Councils warn of uncertainty following one-year settlement decision
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Councils have warned they need certainty about funding reforms and revenue, following the chancellor’s decision to hold a one-year funding review.
Local authorities called for funding to ease cost pressures on hard-pressed statutory services and an idea of future direction for business rates after the announcement by Sajid Javid that he will implement a one-year funding settlement.
The County Councils Network pointed to an estimate by PwC that councils faced a £5.2bn funding gap next year.
Officers identified business rates and funding for children’s services and older people as critical issues that the government needed to address.
Peter Stuart, head of corporate resources at Mid Sussex District Council, told Room 151: “We have pressures on children’s and adults’ services which the prime minister has promised to fix but we’re not sure how.
“We don’t know where we are with the homes bonus and we have negative RSG. We’re part of the business rates pilot but don’t know if it will carry on.”
2nd Housing & Regeneration Finance Summit
October 31, 2019, County Hall, London
Cllr Peter John, chair of London Councils, said services for vulnerable people had to be a priority: “The lives of thousands of vulnerable Londoners who rely on social care services or are homeless depend on it.”
Richard Flinton, chief executive of North Yorkshire County Council warned budget pressures would only increase: “There are growing numbers of older people in the county requiring more expensive packages of care to help support them which needs additional funding.
“The care system is creaking and the chancellor needs to recognise this crisis. We spend about 40% of our overall budget – almost £250m – on public health and adult social care and demand is rising.”
He added: “We have also seen a major increase in the numbers of young people with special educational needs who need support.
“In North Yorkshire we face a £5.5m high needs overspend in the current financial year and this will only increase in the future.”
The delay of the Fair Funding Review had been expected by councils but concern is now mounting that commitments to fund the police, prison expansion and the NHS will ultimately come at the expense of local government.
Cllr Peter John said: “We still urgently need clarity on whether the broader reforms to local government finance – through the Fair Funding Review and 75% Business Rates Retention – will happen next April.”
The delay has created winners and losers among councils in the short-term.
Peter Stuart said: “With regret, we welcome the decision. It gives us another year of knowing where we are. We never thought the districts would benefit from the Fair Funding Review – we thought it would take money from the districts and give it to the counties and unitaries.
“So any delay takes the pressure off our budgets.”
He added: “It’s good for us but not good for local government and that’s not a good way to have to look at a situation like this.”
Counties have long argued the current funding system is biased towards urban authorities and had expected to benefit from the Fair Funding Review.
Cllr David Williams, chairman-elect of the CCN, said: “Given the one-year spending review, it is unlikely that the fair funding review can be introduced next year. This is extremely disappointing.
“However, we will be seeking a cast iron commitment from government that the review is concluded and published this year, with implementation set for 2021/22.”
Richard Flinton said the growing cost pressures meant it was time councils were treated equally to the NHS and police.
He said: “Councils need to be funded adequately for this growth in order to ensure that young people can have their needs met and the opportunities that they deserve without other local services being crushed by this escalating demand.”
The Ministry for Housing, Communities and Local Government (MHGLG) accepted the position of councils but admitted decisions were up to the Treasury which has to build Brexit and a possible election into its plans.
In a statement, the MHCLG said: “We recognise councils want funding certainty for next year.
“With an accelerated spending round due to conclude in September, we will work to confirm the basis of next year’s local government finance settlement as soon as possible.”
