Gove announces extra £600m for councils, primarily aimed at covering soaring social care costs
The Department for Levelling Up, Housing and Communities (DLUHC) has announced an extra £600m in council funding will be added to the Local Government Finance Settlement for 2024-25 to help local authorities deliver key services.
The move comes after campaigning from a number of local government-related bodies and in the wake of a letter signed by 44 Conservative MPs this week which called for more funding.
In a written statement to the House of Commons, Levelling Up Secretary Michael Gove said that £500m of the new funding will go to councils responsible for adults and children’s social care, distributed through the Social Care Grant.
All councils will meanwhile see an increase in core spending power of at least 4% through the 'Funding Guarantee' before any local choices on council tax, efficiencies or reserves.
This represents an increase from the 3% announced in last month's provisional settlement (18 December), which had been criticised for not offering enough money.
At the time, the Local Government Association – which had previously warned that councils in England face a £4 billion funding gap over the next two years – said the provisional settlement would not provide enough funding to meet the "severe cost and demand pressures" facing councils.
The County Councils Network also raised concerns, saying local authorities would be “bitterly disappointed” by the numbers.
In a statement released today (24 January), DLUHC said the decision to amend the Local Government Finance Settlement came after an "extensive" engagement and listening programme with councils to understand the pressures they are facing.
Speaking to the Commons, Gove said: "Looking ahead, we know that there is work to be done between national and local government to improve productivity in local government, as part of our efforts to return the sector to sustainability in the future.
"Whilst the new funding announced today is an important part of these efforts, alongside ongoing work in adults’ and children’s social care, we can go further.
"That is why today, we are asking local authorities to produce productivity plans setting out how they will improve service performance and reduce wasteful expenditure to ensure every area is making best use of taxpayers’ money. I encourage local authorities to consider whether expenditure on discredited equality, diversity and inclusion programmes meets this objective."
The extra funding has been welcomed by local government organisations including the Local Government Association, County Councils Network and the District Councils Network.
Cllr Shaun Davies, Chair of the Local Government Association, said: “The LGA welcomes that the Government has acted on the concerns we have raised and recognised the severe financial pressures facing councils, particularly in providing services to the most vulnerable children and adults through social care services and delivering core front-line services to communities.
“We will continue to work with Government to achieve a sustainable long term funding settlement and updated distribution mechanisms, as well as legislative reform where needed, so that local government can play its full part in delivering inclusive prosperity and growth through investment to support people, places, and the planet.”
Cllr Tim Oliver, Chairman of the County Councils Network, said: “Over recent weeks the County Councils Network has led the way in highlighting the extreme pressures facing county and unitary authorities, and the consequences of not providing them with emergency financial relief. This culminated in a letter to government last week, signed by an unprecedented 46 MPs which illustrates the severity of the issue.
“We strongly welcome the government listening to our concerns, and today’s announcement of an additional £500m will go some way to easing the pressures councils face, and in particular in addressing the escalating in delivering social care and home to school transport."
He noted that while the extra funding is helpful, councils "still face difficult decisions" when setting their budgets for 2024/25 and service reductions "will still be necessary for councils in some areas to balance their books, while the majority of councils will still have little choice but to propose maximum council tax rises".
Cllr Oliver also called for reform of local government finance and on how councils are expected to provide services.
Cllr Sam Chapman-Allen, Chairman of the District Councils’ Network, said: “We welcome the Government’s decision to allocate additional funding for essential district services, a move that will benefit residents and businesses throughout England.
“This offers some relief to district councils and the communities we support. It will help mitigate potentially extensive reductions to valued local services. But it’s important to note that the financial and operating challenges for district councils remain significant.
“It is clear that more comprehensive solutions will still be needed to fully address the ongoing financial pressures, including homelessness.”
John Pearce, Association of Directors of Children's Services President, said: “The additional funding announced today is very welcome and recognition of the significant financial pressures in local government, particularly in children’s social care which undermines our ability to make a difference to children’s lives.
“A one-off cash injection, while helpful, does not negate the need for a sufficient long term funding settlement for children, councils will continue to face difficult decisions about vital services that our communities rely on without this.
He added: “ADCS will continue to work with government to ensure sustainability of children’s services and provide the foundation needed to reform the system so we can improve outcomes for children and young people.”
Adam Carey
