Gove confirms final local government finance settlement for 2024-25, announces tax flexibilities for failing councils

The Secretary of State for Levelling Up, Housing and Communities, Michael Gove, has confirmed the final local government finance settlement for 2024-25 at £64.7 billion.

The figure represents an increase of 7.5% in cash terms for councils in England and includes the extra £600m promised late last month, principally for adult and children's social care.

In a statement on the settlement, the Department for Levelling Up (DLUHC) said it was also supporting all councils through the sector-wide' Funding Guarantee', which ensures all councils will see an increase in Core Spending Power of at least 4% before any local choices on council tax. This is an increase from the 3% announced at the provisional settlement.  

New arrangements will also allow councils to increase council tax by up to 3% without a local referendum, with a further 2% for those responsible for adult social care services.

Further tax flexibilities have also been confirmed today (5 February) for some failing councils, "reflecting the most serious of circumstances". The Department said the decisions had been taken in light of the scale and nature of these failings, the individual council's financial situation, and the need for ongoing government intervention to drive improvement and recovery.

The final settlement includes £1.5 billion in additional funding for social care compared to 2023-24, bringing the total grant funding for social care through this settlement to £8.7 billion.

Levelling Up Secretary Michael Gove: "This settlement, and the changes we have made to address concerns raised through the consultation, will provide local authorities with the tools to support their local communities, continue to reform their services for the long-term, and help communities prepare for the future."

The DLUHC also highlighted its deadline of July 2024 for local authorities to develop and share productivity plans as part of efforts to improve sustainability.

Plans must be agreed by council leaders and members and published on local authority websites, together with updates on progress.

They are expected to cover the following main areas:

• Transformation of services to make better use of resources;
• Opportunities to take advantage of advances in technology and make better use of data to inform decision-making and service design;
• Ways to reduce wasteful spend within systems, "including specific consideration of expenditure on consultants and discredited staff Equality, Diversity and Inclusion programmes – this does not include programmes designed to promote integration and civic pride, and counter-extremism";
• Barriers preventing activity that the Government can help to reduce or remove.

DLUHC explicitly added that the 'four day working week' and other equivalent arrangements of part time work for full time pay "do not deliver value for taxpayers".

The Department will also establish a new productivity review panel, made up of sector experts including the Office for Local Government and the Local Government Association.

Responding to the final local government finance settlement, Cllr Sir Stephen Houghton, Chair of the Special Interest Group of Municipal Authorities (SIGOMA), said: "While it is welcome to see the additional £600m of funding within the final settlement allocations, this extra funding is not sufficient to prevent councils from being forced to make further cuts, or provide local Government with long-term stability.

"The financial viability of the sector is at risk, and many of the pressures councils face will have worsened by the time of the next settlement. Council finances have been pushed to the brink - more funding will be required within the next financial year to stop more councils from issuing section 114 notices, while many of our members will be forced to make impossible decisions about the vital local services they provide.

"As recognised in the recent report from the Levelling Up, Housing and Communities committee, it is critical that the Government tackles the £4bn funding gap for local government, and delivers serious reforms to fix the broken local government finance model."

Adam Carey