In a written statement to parliament, the communities secretary said the money will be distributed according to relative needs and will be taken from “anticipated underspend in existing departmental budgets”. This will not affect existing revenue commitments made to local government.
The government said it increased the Rural Services Delivery Grant by £31m, which is £16m more than was proposed in the provisional settlement in December.
MPs are set to vote on the settlement tomorrow.
The extra funding comes in response to pressure from Conservative backbenchers, led by Shrewsbury and Atcham MP Daniel Kawczynski. He had threatened to withdraw support for the settlement until further adult social care funding was promised.
Local Government Association chair Lord Porter said the extra funding suggested that the government had heeded calls that it needed to take some of the immediate pressure off councils.
But he added: “The additional one-off social care funding announced…is a temporary measure and needs to be compared against an annual social care funding gap of £2.3bn by 2020.
“Core central government funding to councils will be further reduced by half over the next two years and almost phased out completely by the end of the decade.
“We have warned that councils also face an unprecedented surge in demand for children’s services and homelessness support. This is leaving increasingly less money for councils to fund other services, like fixing potholes, cleaning streets and running leisure centres and libraries.”
Rob Whiteman, CIPFA chief executive, said the extra funding was “not a material sum in the grand scheme of things, any extra relief will be welcome to councils struggling with service demands”.
But he added councils were also facing rising pressures on children's social care and services for people with learning disabilities, which had not been addressed by the settlement.
“Northamptonshire being subject now to a section 114 notice is a timely reminder that the current review of local government public funding is taking place at a critical time and should be used to find a solution which ensures that vital public services are protected with sufficient funding according to local needs.” Whiteman said.
Paul Carter, chair of the County Councils Network, said more work was needed “to deliver a long-term sustainable and fair funding solution to meet the estimated £2.54bn funding gap for counties”.
Counties are believed to have borne much of the strain of social care pressures. Kawczynski raised the issue in the Commons last week saying: “In my own county the council is facing a black hole of £10m because of adult social care costs.”
However, after Javid’s announcement Kawczynski took to twitter to thank him:
Grateful to @sajidjavid & @PhilipHammondUK for listening to our concerns over #LocalGovernment Finance Settlement and affording extra £166 million for our Councils to help with Adult Social care Costs. In discussions this evening with @ShropCouncil before vote on Wednesday
— Daniel Kawczynski (@DKShrewsbury) February 6, 2018
As outlined in the provisional settlement, councils will be allowed to increase their core council tax requirement by an additional 1% without a local referendum.
This has been a challenging settlement round for many councils. As well as concerns over social care pressures, there were errors made in the calculations relating to business rate retention, which affected the allocations given to councils in the provisional settlement.
These have since been corrected, but meant 195 councils saw their settlement reduced, according to the Ministry of Housing, Communities and Local Government.
Claire Kober, chair of London Councils said: “This error strengthens the case for the Valuation Office Agency [which calculates the rateable value of properties in England and Wales] work to be devolved to a local level to give businesses greater certainty and add more stability to funding for local services.”
An MHCLG spokesperson said: “We have acted immediately to alert local authorities to the updated data and will be providing revised figures to enable authorities to finalise their budgets.”
