Today the Chancellor has delivered her Spending Review, which sets out how much the Ministry of Housing, Communities and Local Government will receive over the next three years.
Below, the County Councils Network responds to the announcements, which will see the local government part of the Ministry's budget rise by 1.1% each year on average over the Spending Review period.
Cllr Tim Oliver, Chair of the County Councils Network (CCN), said:
“Today’s Spending Review was delivered in a very tight fiscal environment with several departments facing real-terms cuts so an increase in core funding for local government is important, as is the additional money for children’s services, special education needs reform and future funding for adult social care.
“However, this Spending Review will not be a silver bullet for councils’ financial challenges, and much of the increase in ‘core spending power’ is derived from the assumption that local authorities will levy maximum 5% council tax rises each year. Even accounting for these, the sums today fall well short of filling the projected £2.2bn funding gap faced by county and unitary councils next year and consequently further service cuts will be hard to avoid.
“In addition, county and rural unitary councils face significant added uncertainty on how much they will benefit from the announcements today, because forthcoming funding reforms could potentially redistribute hundreds of millions of pounds towards urban councils over the course of this Parliament. With the Spending Review confirming there will be little, if any, central government funding to provide the necessary resources to smooth out this redistribution, many county and unitary councils could ultimately face a real-terms reduction in funding.
“All eyes will now be on these funding reforms. Ministers must deliver an evidence-based approach, ensuring they fully recognise the needs of social care authorities in rural areas and put in place appropriate transitional arrangements that prevents any CCN member council facing a reduction in income. Unless the outcome of the funding review is fair and proportionate, at best many of those councils will struggle to invest in and protect highly valued services outside of adult and children’s social care, while at worst some could be pushed to the brink.
“Moreover, with the financial challenges facing county and district authorities remaining extremely acute it is also imperative that the government maximises the potential efficiency savings that can be achieved through local government reorganisation and avoids, wherever possible, the costs associated with the disaggregation of care services.”
In addition, the Spending Review did not offer any resolution to the issue of special educational needs and disabilities (SEND) services deficits. These are projected to reach over £2.7bn for CCN members next March when the statutory override mechanism keeping them off councils' budget books is due to expire.
However, the government has said within the Spending Review documents it will 'support councils transition to a reformed SEND system in an upcoming local government finance reform consultation.'
Cllr Oliver added:
“The mounting special educational needs and disabilities (SEND) service deficits are the burning platform for many local authorities yet there was no resolution in the Spending Review. We are now nine months away from a financial cliff edge when these multi-billion deficits are placed onto councils’ budget books, potentially rendering half of England’s county and unitary councils insolvent overnight.
“With the total deficit for county and unitary councils projected to reach at least at least £2.7bn next March when councils will have to address it, we need urgent clarity from government. Councils will soon start planning their budgets for next year and cannot afford to have this can kicked down the road any longer.
“While the Spending Review did indicate that the government will set out how it will support local authorities transition to a reformed system in an upcoming local government funding reform consultation, it is vital that consultation includes a comprehensive plan to eliminate deficits.”
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