Local Government Finance Settlement 2023-24

On 12 December, I published a policy statement outlining proposals for the 2023-24 local government finance settlement and details of funding in 2024-25. Today, I have set out the provisional local government finance settlement for 2023-24 and launched our formal consultation on the proposals. This settlement provides a 9% increase in national level core spending power, making available almost £5 billion in additional resources, demonstrating how Government stand behind councils up and down the country.

Together, the policy statement published on 12 December, and this proposed settlement:

Give multi-year certainty to local authorities, allowing them to plan ahead with more confidence over the rest of the spending review period.

Ensure stability by introducing a one-off funding guarantee 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.

Provide around £2 billion in additional grant for children’s and adult social care in 2023-24.

Maintain a balance on council tax, protecting residents from excessive increases while allowing councils to generate income to deliver local services.

Local government has long called for greater certainty on funding following repeated one-year settlements. In the policy statement published on 12 December, the Government have provided this certainty by setting out clearly our intentions and proposals for the 2024-25 settlement.

Government recognise that all local authorities are facing pressures. In this proposed settlement we are taking action to provide stability for all local authorities, across all tiers of local government, to support the vital work they undertake for communities across the country.

We are introducing a new, one-off funding guarantee that ensures every local authority will see a minimum 3% increase in their core spending power, before taking any local decisions to increase council tax rates.

Adult and children’s social care services provide crucial support to care users and young people in need, and this proposed settlement provides significant additional funding for this key area of concern. Government have listened, and we know that many local authorities are already facing difficult decisions brought on by inflationary and demand pressures. This is why we are providing around £2 billion in additional grant for social care, compared to 2022-23. Additionally, for social care authorities, we are consulting on a 2% precept for 2023-24. The council tax referendum provisions are not a cap, nor do they force councils to set taxes at the threshold level. When taking decisions on council tax levels, local authorities should recognise the pressures many households are facing.

We have also listened to councils’ concerns about implementing adult social care charging reform in light of these pressures. That is why Government have made the difficult decision to delay these reforms, and to prioritise core pressures rather than risk destabilising the market. The funding intended for implementation will be retained in local authority budgets.

The Government’s manifesto commits to continuing to protect local taxpayers from excessive council tax increases. This is an additional local democratic check and balance to avoid a repeat of what was seen under the last Labour Government when council tax more than doubled. The Government intend to proceed with a core referendum principle of 3% for 2023-24. Furthermore, we are proposing a bespoke council tax referendum principle of up to 3% or £5, whichever is higher, for shire districts. On top of this, we intend to proceed with a £5 referendum principle on band D bills for all fire and rescue authorities and a £15 referendum principle on band D bills for police and crime commissioners.

This proposed package of referendum principles strikes a fair balance. The council tax referendum provisions are not a cap, nor do they force councils to set taxes at the threshold level.

The Mayor of London has requested flexibility to levy an additional £20 on band D bills to the Greater London Authority (GLA) precept to provide extra funding for Transport for London (TfL). The Government have expressed ongoing concern about the management of TfL by this Mayor, and it is disappointing that London taxpayers are having to foot the bill for the GLA’s poor governance and decision making. While the Government will not oppose this request, any decision to increase the precept is solely one for the Mayor, who should take into account the pressures that Londoners are currently facing on living costs and his decision to raise his share of council tax by 8.8% last year.

We are also today announcing £100 million of additional funding for local authorities to support the most vulnerable households in England. This funding will allow councils to deliver additional support to the 3.8 million households already receiving council tax support, whilst also providing councils with the resources and flexibility to determine the local approaches to support other vulnerable households in their area.

These proposals will provide councils with the support they need. They give certainty, ensure stability, provide significant additional resources for social care, and maintain balance on council tax.

I welcome representations from all interested parties on the consultation we have launched today. The consultation will run until 16 January. The Local Government Minister will also be holding engagement sessions for Members of Parliament in the week commencing 9 January 2023.

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