2021 Autumn Budget: the LGA Labour view

2021 Autumn Budget: the LGA Labour view

Councils are still being hugely underfunded compared to 2010

Since 2010 government funding for councils has reduced by over £16bn, and cuts have hit the councils with the poorest populations hardest.

New grant funding of £4.8bn over three years for local government is better than we have come to expect in recent years, but doesn’t come anywhere near to returning funding to 2010 levels, (even ignoring the effects of inflation over that period).

The Budget did not deliver enough money for councils to maintain services even at current levels

Whilst the new grant funding of £1.6bn a year is welcome after a decade of year on year cuts, it is not enough to maintain council services even at current levels over the next three years.

The LGA has calculated councils need £6.7bn in 2022/23 to maintain current services at current levels and deal with acute pressures in children social care, homelessness, SEND, public health etc (see table at end for breakdown).

The extra government funding of £1.6bn, plus the expectation that councils will put council tax up by a maximum of 3%, increases total council spending power by just £3.3bn in 2022/23 – less than half of what is needed.

The squeeze on Council Tax payers has not stopped…

The Office of Budget Responsibility says that the government is expecting to squeeze a further £5.3bn from the pockets of council taxpayers. Hidden in the small print of the Budget documents, the Chancellor is requiring councils to make council tax rises of 9% over the next three years (2% council tax, 1% adult social care precept) which will see the average council tax bill hit £2074 by 2024/25, up from £1898 today. That means the average family will pay an extra £348 in council tax over the next three years.

Ahead of the Budget we handed in your Stop The Squeeze petition, signed by over 3,600 Labour councillors, to Downing Street. We’re disappointed that the Chancellor did not respond positively to our campaign, and is again forcing council taxpayers to fill the funding gaps he has created. But we will renew and develop the campaign ahead of the Local Government Finance Settlement, and make sure the public understand that the responsibility for higher council tax bills lies with Downing Street, not councils.

Attention turns to the Local Government Finance Settlement: will the new grant funding be fairly distributed?

There is a real risk that there will be a sting in the tail of the extra funding in the Budget, as we do not know how the government will choose to distribute it amongst councils. Over the last decade the Conservatives have repeatedly manipulated funding formula to benefit some councils over others – creating new funding pots such as the Rural Services Grant to funnel cash to Tory councils, while denying Labour councils their fair share. This should be confirmed in the Local Government Finance Settlement in December 2021.

More council tax and adult social care precept rises also benefit councils with richer populations much more than poorer ones, as different areas have totally different levels of lower and higher band properties: so a 2% council tax rise in poorer councils (with lots of low value properties) raises much less than a 2% rise in richer areas that have a lot of high value properties. For instance a 2% rise would raise £24.3m in Surrey, but in Birmingham raises just £11.7m despite a similar sized population. If the distribution of the £4.8bn does not take this into account, richer areas will benefit much more than areas that need more help.

We will also find out whether the government will give councils certainty by announcing a three-year settlement, or if councils will only get a one year settlement confirmed funding for 2022/23 only which makes budget planning very difficult.

Adult Social Care

The LGA said ‘this is a disappointing settlement for adult social care and we remain concerned about the sector’s immediate and medium-term sustainability’.

The Budget did nothing to tackle the long term financial sustainability of social care: the additional £1.6 billion for local government next year is not enough to cover the rising cost of social care, let alone the many other council services under pressure. Social care’s core cost pressures for 2022/23 are estimated at £1.1 billion and come on top of a pre-existing and annually recurring pressure of £1.5 billion to stabilise the care provider market (the difference between what providers say is the benchmark cost of providing care and what councils pay).

The government’s plan for social care reform is already falling apart. Councils will receive an extra £3.6bn over three years from the new Health and Social Care levy (though only £200 million comes in 2022/23) but this funding is not to address the current significant pressures, but to implement the new cap of £86,000 for personal care costs, and to expand the means tested support to people with less than £100,000 in relevant assets. The LGA has said that this funding ‘is unlikely to be sufficient to pay for the costs of the reforms’, thus piling further pressure on councils.

Children and young people

Only 75 councils will receive a new ‘family hub’ as the Chancellor is providing just £18 million (and not until 2024-25) to create ‘family hubs’, and £20 million for parenting support (not until 2024-25). This government had already cut £1.7bn from the Early Intervention Grant leading to the closure of over 500 Sure Start centres since 2010.

Public Health funding

Despite emerging from a global pandemic, there is no increase in public health funding. This is a remarkable oversight, and means that we will no better prepared for future pandemics than we were for coronavirus.

Levelling Up

Congratulations to those Labour councils who were successful in their campaign to win funding for projects in your area. If your project has not been funded, make sure your residents know that the government have turned their back on them.

The competitive bidding process means that scarce council resources have been diverted at a time when local capacity continues to be stretched by multiple pressure in local areas. After a decade of underfunding every part of the country the government should return funding to all areas to spend on vital projects they judge to be important, not force them to compete against each other.