Government announces new funding boost for councils

Friday December 18th, 2020

Councils across England will receive £51.2 billion next year – an increase of £2.2 billion from last year, Local Government Secretary Robert Jenrick announced yesterday (17 December 2020).

This financial package provides councils with additional resources to deliver effective local services and continue to support their communities during the pandemic, while protecting council taxpayers from excessive increases.

It includes a £2.2 billion increase in core funding – including a £1 billion increase in social care funding to ensure councils can meet rising demand, fund more care home places and social workers, and protect some of the most vulnerable in society.

Also announced were allocations for £1.55 billion of unringfenced funding for councils to continue to support their communities during the pandemic and lead the recovery in their local areas. The allocation of this money has taken into account a range of factors including population and deprivation, as well as the varying cost of delivering services across the country.

In addition to the £1.55 billion, £670 million has also been confirmed to enable councils to continue reducing council tax bills for those least able to pay, including households impacted financially by the pandemic.

A local tax income guarantee scheme for irrecoverable losses this year will also help compensate councils for lost council tax and business rates income. This means the Government are confirming an estimated £3 billion of additional support for councils to deal with the pandemic, taking the total overall to over £10 billion.

This comprehensive financial package will provide councils with the certainty they need to plan their budgets for the coming year.

Included in the £51.2 billion provisional settlement is:

Rewards for welcoming new homes

The government has committed £622 million to continue the New Homes Bonus scheme in 2021-22. The scheme financially rewards councils for the number of additional new homes they built, locally incentivising housing growth and creating homes for local residents.  We will soon be inviting views on how we can reform the scheme from 2022-23 to ensure it is focussed where homes are needed most.

A new Lower Tier Services Grant

The government is proposing a new unringfenced Lower Tier Services Grant in 2021-22, which will allocate £111 million to councils with responsibility for services such as homelessness, planning, recycling and refuse collection and leisure services. The grant will contain a one-off minimum funding floor, so that no council – either upper or lower tier – will have less funding available in 2021-22 than this year.

Giving local residents a voice on council tax rises

Local residents will have the power to veto excessive council tax rises, with a referendum being required if councils propose raising the tax by 2% or more, with extra flexibility for some authority types. Before setting rates, councils should take into account the financial circumstances of their residents.

Councils with responsibility for adult social care will be able to set a further 3% increase, ring-fenced exclusively for adult social care. Anything above this level will need to be voted on by local people. This strikes the right balance between addressing pressure on services and giving council-tax payers the final say on excessive increases.

In order to support those least able to pay their council tax, including households financially hard-hit by the pandemic, there will be £670 million of new grant funding available outside of the core settlement for local council tax support.

Support for rural areas

The government is committed to ensuring the unique needs of rural areas are met, and so will boost the Rural Services Delivery Grant by £4 million to £85 million next year, making it the highest rural grant paid to date.

In order to further support councils next year, we have previously announced:

Help for rough sleepers

We are committed to building on the progress of Everyone In and support rough sleepers and those at risk of homelessness during COVID-19. Including an additional £254 million resource funding for 2021-22 to tackle homelessness and rough sleeping, including the £103 million announced earlier this year for accommodation and substance misuse support. This means the government will be spending over £750 million to tackle homelessness and rough sleeping next year.

More support for victims of domestic abuse

The government has committed an extra £125 million new burdens funding for local authorities to provide safe accommodation for victims of domestic abuse and their children. This new duty, included in the Domestic Abuse Bill, forms part of the government’s ongoing commitment to support families affected by domestic abuse.

The Home Office has announced policing will receive up to £15.8 billion to build back safer and cut crime. The 2021-22 funding package includes over £400 million to recruit 20,000 extra officers by 2023 and will enable policing to tackle serious violence and increase the number of specialist officers tackling counter-terrorism and serious organised crime.

The government has published its response to Sir Tony Redmond’s review into audit and transparency of council financial reporting.

We will also provide councils with an additional £15 million in 2021-22 to implement Sir Tony’s recommendations for strengthening the local audit system. This includes supporting councils to fund external auditors and to produce an easily accessible annual statement of their service costs. This will help improve transparency and accountability in councils going forward.

Local Government Secretary Rt Hon Robert Jenrick MP said:

Councils have played a critical role leading their communities during the pandemic and delivering vital local services to vulnerable people and we have supported them with £7.2 billion extra funding to date.

I am announcing a financial package that will provide over £5 billion of extra support next year. This will give councils the resources they need to lead the recovery of their communities while delivering the services that people rely on.

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