The Local Government Finance Settlement is the annual determination of funding to local government and was announced to Parliament on Thursday 17th December. The settlement details the central funding provided to each local authority for 2021/22, and how much the government expects them to increase council tax, which councils will use to set their budgets for the year ahead. The Institute for Fiscal Studies recently calculated that in the decade since 2010 councils have received 77 per cent less in real central government grants per person.

The government has announced that Calderdale Council’s “Core Spending Power” will increase by £7,951,867 with £6,331,507 of this rise expected to come from increasing Council Tax, as set out in the spreadsheet attached.

  • COVID-19 has cost Calderdale at least £27.7 million [Counting the cost of COVID-19]
  • Local Authorities face a coronavirus funding gap of £7.4bn in 2020/21

At the end of October councils reported spending an extra £6.15bn due to covid-19, a figure which is likely to have increased since then. The same figures show councils expected income had fallen by £5.9bn over the same period, leaving a total cost of at least £12bn.

Table 46 and 47 in round 7 here:

Yet Government has provided just £4.6bn – £3.7bn in table 52 in round 7 of the above and an additional £900m in un-ringfenced funding announced here:

This leaves a current in-year funding gap of £7.4bn – equivalent to 15.1% of council spending

  • Ministers have broken promises to stand behind councils fighting the virus

Ministers promised to stand behind local authorities’ coronavirus-led budget reductions. On March 18th ministers provided assurances that they would make sure the government provides “whatever funding is needed for councils to get through this and come out the other side”, a pledge repeated by Robert Jenrick.

However, Ministers have rowed back on those plans, with Communities secretary Robert Jenrick telling MPs that councils should not “labour under a false impression” that all costs would be reimbursed, provoking widespread anger amongst local government leaders and MPs.

  • That comes on top of a decade of austerity – councils have made cuts of £16bn over the last decade

£16bn in central government funding for local government over the last decade (LGA)

The Institute for Fiscal Studies calculates that councils received 77 per cent less in real central government grants per person in 2019-20 than a decade earlier. Social care bore much of the brunt.

The Local Government Association, which represents local authorities, has said council tax represented 45 per cent of members’ core spending in 2010-11 but by 2020-21 it had risen to 60 per cent.

“Councils will still have to find savings to already stretched budgets in order to plug funding gaps and meet their legal duty to set a balanced budget in 2021/22. This means residents may see their council forced to increase bills next year . . . but still have to make cutbacks to local services, including social care.”

  • The Spending Review delivered a £2bn Council Tax rise alongside a public sector pay freeze for key workers including police, fire, and teachers

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