MPs give green light to local government finance settlement

8 Feb 18

Parliament has approved the local government finance settlement following this week’s announcement of an additional £150m for social care.

Communities secretary Sajid Javid said that the settlement “strikes a balance between relieving growing pressure on local government whilst ensuring that hard-pressed taxpayers do not face excessive bills”.

In the weeks running up to last night’s vote, concerns were raised over the shortfall in adult social care funding, especially for county councils.

Following arguments from MPs, Javid agreed to put an extra £150m into adult social care, in particular to placate counties, which are seeing rising pressures from their elderly populations.

On top of this, an additional £16m was given to the rural services grant to help deliver services in rural areas.

Analysis shared with PF shows that county councils will receive the largest share of the additional £150m in adult social care funding, with £56m being shared between them.

Unitary authorities will take the next biggest slice, with £34m, while £37m will go to metropolitan authorities and £23m to the London boroughs.

During yesterday’s Commons debate, Javid faced criticism from some MPs who noted a disparity in funding for metropolitan and rural areas. 

Calling attention to the fairer funding review, Daniel Kawczynski, MP for Shrewsbury and Atcham who led calls for extra funds for counties, said a “huge gulf that is starting to appear between city metropolitan areas and rural shire counties.”

“We are becoming second class citizens in rural areas because of the lack of funding,” he said.

Kevin Hollinrake, MP for Thirsk and Malton, echoed this saying: “We need a fairer funding review that delivers fairness for North Yorkshire and other rural areas.”

The fair funding review, announced late last year and currently out to consultation, will update the funding formula for local government, taking into account councils’ relative needs and resources. The consultation closes on 12 March.

Under the settlement, councils will be able to increase their council tax by 3%, on top of the ability to levy a 3% precept for adult social care.

Javid also announced another 10 business rates retention pilots, varying in size and location, which will keep 100% of growth in business rates.

This follows an existing scheme which Javid referred to as “a resounding success”.

The settlement has been the subject of much controversy since it was published in provisional form in December.

Incorrect figures relating to business rate retentions were published by the MHCLG and subsequently corrected, which meant 195 councils saw their settlement reduced.

The Local Government Information Unit today published a survey showing that a majority of councils planned to increase council tax and charges, and that many were using their reserves.

Did you enjoy this article?