Today I laid before the House the “Local Government Finance Report (England) 2020-21”, the “Referendums Relating to Council Tax Increases (Principles) (England) Report 2020-21” and the “Referendums Relating to Council Tax Increases (Alternative Notional Amounts) (England) Report 2020-21” which represent the final local government finance settlement for 2020-21.
This year’s settlement delivers an increase in core spending power from £46.2 billion in 2019-20 to £49.2 billion in 2020-21. In real terms this is a 4.4% increase and the largest year on year real-terms increase in a decade.
The local government finance settlement relies on collaboration. My Ministers and I have engaged extensively with the sector, holding meetings with representative groups, with councils, and with MPs. During this process, we received over 200 representations from organisations or individuals, and these have been carefully considered before finalising the settlement. I would like to take this opportunity to thank all colleagues in the House, and council leaders and officers, who have contributed to the consultation process.
This year’s settlement is a strong and well-balanced package that delivers significant extra resources to the priority areas of adult and children’s social care, whilst protecting other vital service areas.
Extra social care resources
This Government are serious about protecting the millions of people who rely upon adult and children’s social care in their daily lives. To do this, this settlement will allow local authorities to access an additional £1.5 billion for social care. This comprises £1 billion of additional grant—for both adult and children’s social care—and a proposed 2% council tax precept for adult social care, which will enable councils to access a further £500 million. Some £150 million of the additional grant will be used to equalise the distributional impact of the adult social care council tax precept.
These additional resources sit on top of the existing social care package, which will continue at 2019-20 levels, and mean that local authorities will have access to almost £6 billion of dedicated funding across adult and children’s social care in 2020-21.
Core settlement resources
The local government finance settlement for 2020-21 will also protect other key services by providing a uniform percentage uplift in core settlement resources, in line with the change in the small business rates multiplier. Vital services are also protected by continuing other key grants from 2019-20.
Council tax
Local authorities will continue to be able to increase council tax in 2020-21 by a core principle of up to 2%, without holding a local referendum, with a bespoke council tax referendum principle of 2% or £5, whichever is higher, for shire district councils, and a £10 Band D council tax referendum principle for all police authorities. Authorities with adult social care responsibilities will be able to increase their council tax by a further 2% on top of the core principle, without holding a local referendum, to be spent exclusively on adult social care.