Local authorities’ core spending power will increase by £4bn to £64bn next year but there won’t be any “fundamental reforms” to funding, the local government finance policy statement for 2024 to 2025 has said.
Ahead of the local government finance settlement for 2024/25, the Department for Levelling Up, Housing and Communities (DLUHC) has published today (5 December) a policy statement of the funding measures councils in England should expect for the next financial year.
The statement outlined that the Revenue Support Grant will rise in line with the consumer price index of inflation (it is unclear what month’s figure the department has used), meaning that in cash terms, this is an increase of around £4bn for councils or over 6%.
Last year, authorities received a funding package of £59.5bn, so this rise means that this year councils will receive approximately £64bn.
In a written statement, levelling up secretary Michael Gove said: “At this year’s settlement, we are on course to provide an above-inflation increase in funding to the sector.
“At this time, we also recognise the need to provide stability to the whole sector, and we are therefore providing a sector-wide funding guarantee. This will be on the same terms as last year, ensuring that all local authorities see a minimum 3% increase in their core spending power before taking any local decisions on council tax levels.”
The policy settlement also confirmed that the core council tax referendum limit for local authorities will be up to 3%, with an additional 2% for authorities with adult social care responsibilities. Districts will have a referendum principle of up to 3% or £5, whichever is higher. However, the statement added that the Greater London Authority will be given the flexibility to levy an additional £20 on Band D bills.
‘No fundamental reforms’
In his statement, Gove stated that in the final year of the current spending review period, “now is the time for stability and continuity, and we will therefore not be pursuing any fundamental reforms to the system”.
However, Gove did acknowledge that despite the decrease in the rate of inflation, pressures still exist for local authorities. Therefore, he asked authorities to continue to “consider” how they can use their reserves to maintain services over the next financial year.
“The exceptional financial support framework is available to provide support where a council has a specific and evidenced concern about its ability to set or maintain a balanced budget, including where there has been local financial failure,” he added.
Gove also noted that the government is pleased to reconfirm the £4.7bn of additional funding for social care that was announced in the 2022 Autumn Statement.
Other measures detailed in the policy statement include continuing other grants such as the Rural Services Delivery Grant and the New Homes Bonus.
Finishing off his statement, Gove reiterated DLUHC’s recent intervention on local authorities implementing a four-day week, by stating that “any attempt” from a local authority to do so would “not represent good value for taxpayers’ money, nor places the sector in a good light with the public”.
All the proposals set out in the policy statement will be subject to the usual consultation process within the local government finance settlement.
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