Local government organisations have expressed disappointment that the Spring Budget did not address ways to ease the severe financial pressures the sector is facing.
The Local Government Association (LGA) lamented the lack of any new measures that would help “adequately fund” local services, while Solace said the Budget “failed to properly address the extreme financial pressures facing local government”.
A six-month extension of the Household Support Fund (HSF) offered some good news, but the “short period” of the extension and the “very last minute” wait for the extension also disappointed the LGA.
Shaun Davies, chair of the LGA, said the government needed “to use the next six months to agree a more sustainable successor to the HSF”, stating that “councils need certainty and consistent funding”.
Elsewhere in the Budget, chancellor Jeremy Hunt also announced that a multi-billion pound, “landmark” Public Sector Productivity Plan for the NHS would serve as a model for the rest of the public sector, including local government.
Some £800m to boost productivity across public services other than the NHS will deliver £1.8bn in productivity benefits by 2029, with OBR analysis suggesting that raising public sector productivity by 5% would deliver up to £20bn of benefits a year.
Local authorities have already been asked to produce productivity plans by July 2024 setting out how they will improve service performance, utilise data and technology, and reduce wasteful spend.
In his Budget, Hunt also announced that local leaders would be empowered to improve their communities through more devolved powers. New devolution agreements for Buckinghamshire, Warwickshire and Surrey will devolve powers over adult education and infrastructure to the areas.
A new North-East trailblazer devolution deal which comes with a funding package potentially worth over £100m will support the region’s growth ambitions, he said, while he also announced “hundreds of millions” in funding to extend the Long Term Plans for Towns to 20 new places and cultural projects, and over £240m to build nearly 8,000 homes in Barking Riverside and Canary Wharf alongside a new life sciences hub.
The government recently announced deeper devolution deals with West Yorkshire, Liverpool City Region, and South Yorkshire Combined Authorities, as well as granting additional powers to the West Midlands Combined Authority. Taken together, the Spring Budget notes that “these deals will increase the proportion of the population of England benefitting from devolved powers to almost two-thirds”.
The Spring Budget also commits £45m match funding to local authorities to build an additional 200 open children’s home placements, and £120m to fund the maintenance of the existing sites. The aim is to reduce local government reliance on costly emergency provision and improve outcomes for children by providing them with more suitable placements.
The government has also committed an initial £105m to create 15 new special free schools with more than 2,000 additional places for children with special educational needs and disabilities (SEND) across England.
Reaction to the Budget
Patrick Melia, Solace spokesperson for local government finance, criticised the government for choosing to “ignore the real issues” the sector is facing and “instead make misleading statements about councils’ spending”.
He said: “Local government has long been recognised as one of the most, if not the most, efficient parts of the public sector. The truth is councils are long past the point of delivering savings through efficiencies and are now firmly in the territory of reducing or cutting services that will impact on residents – including preventative services that will result in greater costs down the line. And with the gloomy future outlook for public finances, the Institute for Fiscal Studies has already warned that it will “make it more difficult” for councils to meet the government’s public service objectives.
“Continued underinvestment in local areas will only serve to further restrict the economic prospects of the country at a time when growth has never been more needed.”
Melia said the issues facing local government could only be ignored for so long and that “very soon central government will have to grasp this nettle, properly address the systemic financial challenges facing local government, and so unleash the potential of places to create good new jobs and drive local and national economic growth”.
Audit, tax and advisory firm Mazars also questioned the impact the Public Sector Productivity Plan would have. Peter Cudlip, head of Mazars public and social sector, said the Budget announcements would “be a tough pill for local authorities to swallow”.
“The outlook for local authorities feels relatively bleak and their financial stability remains under immense scrutiny, meaning public services and employment are increasingly at risk. Many councils have been struggling financially for some time, and understandably, they’ve been focusing on short-term measures to plug the finances, especially as there are few efficiencies left to be found,” he said.
“With even leaner budgets available, a radical rethink in approach is needed to enable lasting improvement and allow real change to happen. With the announcement of a Public Sector Productivity Plan, local authorities must focus on transformation with demonstrable returns on investment, instead of short-term efficiency gains and prioritise digital skills and capabilities. However, even if available funds are fully invested in transformation, will it resolve the underlying financial challenges facing the sector?”
Added uncertainty
The LGA’s Davies noted that while councils continue to transform services, core spending power in 2024/25 has been cut by 23.3% in real terms compared to 2010/11. “It is unsustainable to expect them to keep doing more for less in the face of unprecedented cost and demand pressures,” he said.
“Councils of all political colours are starting this financial year in a precarious position, and having to scale back or close a wide range of local services, so the continued squeeze in public spending in the years ahead is a frightening prospect for communities.
“This year also saw the sixth one-year settlement in a row for councils. Keeping them on a financial drip feed in this way has led to the steady weakening of local services. Councils need greater funding certainty through multi-year settlements to prevent this ongoing decline but also to ensure key national government policies – such as boosting economic growth, creating jobs and building homes – can be achieved.”
Devolution milestone
In a more positive appraisal, the County Councils Network (CCN) – which has supported negotiations between local authorities and government over several months – welcomed the latest county devolution agreements announced in the Spring Budget.
Phillippa Williamson, devolution spokesperson for the CCN, said: “Today’s announcement of three county devolution agreements for Warwickshire, Buckinghamshire and Surrey is important – and represents another crucial milestone in the devolution agenda. These agreements, when ratified, will bring powers closer to our communities, and provides us with extra levers to pull in order influence adult education provision, infrastructure and transport needs in our counties and, in doing so, support our residents and businesses.”
The agreements take the number agreed since publication of Levelling-up White Paper to 15 CCN members in total.
“This is a significant number considering it has only been two years since that white paper, and credit must be given to county leaders across England who have shown ambition and flexibility in order to secure extra powers and funding for their areas,” Williamson said.
“As impressive as this number is, we believe the momentum on county devolution should still be maintained and we will be working to support the agreement of further deals for as many CCN members as possible by the end of this parliament – and beyond.”
Responding to the Budget announcements more generally, Barry Lewis, CCN’s vice chair and spokesperson for finance, expressed concern that while the government has maintained the 1% growth in public spending in 2025/26 and beyond, “this would still mean a squeeze on unprotected public services, including local government”.
He cited CCN analysis showing that even if member councils deliver a further £1bn of planned savings over the next two years, they would still face a collective funding shortfall of £1.1bn.
“While we welcome today’s announcements on supporting councils to reduce costs in children’s care placements and investment in more special school places, there is no more fat to cut and productivity gains can only get us so far. CCN member councils will not be able to withstand further funding reductions in the next parliament without fundamentally undermining the financial solvency of even the most well-run and efficient councils.”
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