On 5 December, I published a policy statement outlining proposals for the 2024-25 local government finance settlement to provide early certainty for councils. Today, I have set out the provisional local government finance settlement for 2024-25 and launched our formal consultation on the proposals. This settlement makes available over £64 billion for local authorities in England, an increase of almost £4 billion or 6.5% in cash terms in core spending power on 2023-24. This is a real-terms increase which demonstrates how the Government stand behind councils up and down the country.
Together, the policy statement published on 5 December, and this proposed settlement:
ensures stability by maintaining the funding guarantee introduced last year, to ensure that every council sees at least a 3% increase in core spending power next year before any local decisions on council tax rates; and
makes available an increase of almost £4 billion on 2023-24, of which £2 billion is additional Government funding; £1 billion of this is for children’s and adult social care in 2024-25.
Stability
Now is the time for stability and continuity. Despite recent decreases in the rate of inflation, the Government recognise that pressures still exist for all local authorities. In this proposed settlement, we are maintaining the funding guarantee we introduced at last year’s settlement to ensure stability for all local authorities, to support the vital work all tiers of local government undertake for communities across the country. By maintaining the funding guarantee, the Government are ensuring every local authority in England will see a minimum 3% increase in their core spending power, before taking any local decisions to increase council tax rates.
We are also uplifting core settlement funding, with the revenue support grant increasing by CPI, and local authorities seeing an increase in baseline funding levels (BFLs) and compensation grant as if both business rating multipliers had increased by CPI. We are continuing the approach set out at last year’s settlement for other grants such as the rural services delivery grant and new homes bonus, which we know are important to councils.
The Government note that whilst local authority reserves are falling, they remain significantly higher than prior to the pandemic. We continue to encourage local authorities to consider, where possible, the use of their reserves to maintain services in the face of these pressures.
We will continue to support projects that reduce costs and improve efficiency by extending the flexibility to use capital receipts to fund revenue costs of these projects to March 2030. We will also engage with the sector to explore additional capital flexibility options to enable invest-to-save and transformation initiatives.