Local Government Finance Settlement 2023-24

Michael Gove Excerpts

Monday 6th February 2023 Written Statements

[The Secretary of State for Levelling Up, Housing and Communities (Michael Gove)]

Introduction

Local government plays a vital role in supporting, improving and helping communities up and down the land. Councils do amazing work, every day and often away from the headlines, on a huge range of many different subjects and important issues.

This settlement will ensure that councils across the country have further resources available to deliver services to their communities.

Today I am laying before the House the Local Government Finance Report (England) 2023 to 2024, the Referendums relating to Council Tax Increases (Principles) (England) Report 2023 to 2024, and the Referendums relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2023 to 2024. Together, these form the final local Government finance settlement for 2023-24.

Total funding—core spending power

In recognition of the work undertaken by councils, this settlement makes available an increase of 9.4% in cash terms of national level core spending power. This makes available £5.1 billion in additional resources, to help local authorities to support their communities through challenging times.

Funding guarantee

Local government delivers a broad range of services for all our communities. That is why we are supporting all tiers of local government through this settlement with a new, one-off funding guarantee that ensures all local authorities will see a minimum 3% increase in their core spending power before taking any local decisions on raising council tax.

Council tax

The Government manifesto commits to continuing to protect local taxpayers, in normal circumstances, from excessive council tax increases. The package of referendum principles we are proposing strikes a fair balance. This settlement confirms our intention for referendum principles of up to 3% for core council tax and up to 2% for the adult social care precept in 2023-24, significantly below headline rates of inflation. These provisions are not a cap, nor do they force councils to set taxes at the threshold level. When taking decisions on council tax levels, I expect councillors, mayors, police and crime commissioners and local councils to take into consideration the pressures many households are facing.

The Mayor of London has requested flexibility to levy an additional £20 on band D bills to the Greater London Authority (GLA) precept to provide extra funding for Transport for London (TfL). The Government have expressed ongoing concern about the management of TfL by this Mayor, and it is disappointing that London taxpayers are having to foot the bill for the GLA’s poor governance and decision making. While the Government will not oppose this request, any decision to increase the precept is solely one for the Mayor, who should take into account the pressures that Londoners are currently facing on living costs and his decision to raise his share of council tax by 8.8% last year.

Social care

This settlement ensures a significant additional taxpayer subsidy for social care services. Ahead of any consideration of council tax, it provides around £2 billion in additional grant for social care in 2023-24. This includes:

£300 million discharge funding to be pooled as part of the better care fund to get people out of hospital on time into a care setting.

£1.3 billion to be distributed to councils through the social care grant for adults’ and children’s social care, on top of the rollover in funding from 2022-23.

Adult social care market sustainability and improvement funding of £400 million, which will be combined with the existing £162 million in fair cost of care funding.

I am also pleased to announce that we have published an explanatory note on social care funding today, setting out more detail on the different social care grants provided for through this settlement.

Changes following consultation and engagement

We received 157 responses to the provisional local government finance settlement consultation, and I am grateful to everyone who took the time to respond. Following the consultation and engagement process on the provisional settlement, we have made the following changes:

New homes bonus allocations

Alongside the provisional settlement, we asked local authorities to check the accuracy of homebuilding data they have returned to us and tell us if it is inaccurate. Following these representations, we have increased new homes bonus allocations by £0.63 million and funded this through contingency set aside at the provisional Settlement.

Rural services delivery grant

In recognition of specific cost pressures in rural areas the Government are increasing the rural services delivery grant by £10 million, bringing the total value to £95 million. This is funded through contingency set aside at the provisional settlement.

Contingency funding

Increasing services grant by £19.1 million above the provisional settlement proposals, by distributing unused contingency back into local government as proposed at the provisional settlement, through the services grant. To account for changes between the provisional and final settlement, the funding guarantee has been recalculated to ensure that all authorities will see at least a 3% increase in their core spending power before any decision they make about organisational efficiencies, use of reserves, and council tax levels. Any funding no longer going to the funding guarantee has been allocated back through the services grant.

Thurrock, Croydon and Slough Councils

Following significant failures in their local leadership, governance and financial management, the Government received requests from Thurrock, Croydon and Slough for the flexibility to increase their council tax by an additional amount, to provide extra funding to support their financial recovery. This is on top of the significant additional support Government have already granted through the exceptional financial support process. Given the exceptional circumstances of these councils, including unprecedented financial deficits driven by poor decision making in the past and the need for ongoing Government intervention to drive their improvement and recovery, the Government have decided not to oppose the requests.

In line with their requests, Thurrock and Slough will be able to raise council tax by an additional 5% above referendum principles applied to other councils, and Croydon will be able to raise an additional 10%. The Government are of course conscious of the impact on local taxpayers, particularly those on low incomes, of having to foot part of the bill for their councils’ very significant failings. We have been clear to each of the councils that in implementing any additional increases, they should take steps to mitigate the impact on those least able to pay.

Other

Every authority in England will receive a share of the accumulated surplus currently held in the business rates levy account. I can confirm that £100 million will be returned to the sector on a one-off basis to be distributed based on each local authority's 2013-14 settlement funding assessment.

The services grant allocation for the Isle of Wight council includes an additional £1 million that was allocated to the council for 2022-23 and 2023-24 in recognition of the unique circumstances facing the Isle of Wight and its physical separation from the mainland. This funding is reviewed each year as part of the local government finance settlement.

We have also seen the representations from local authorities facing significant increases in internal drainage board levies and will commit to working with the most affected local authorities ahead of the new financial year.

These changes seek to address some of the concerns raised during the consultation period on our proposals, and to even better provide local authorities with the tools to support their local communities, continue to reform their services for the long term, and to help communities prepare for the future.

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