Spending Review: Local Government Finance

The spending review, announced by the Chancellor on 25 November, contained significant announcements for local government. The Government confirmed that councils’ core spending power would rise by an estimated 4.5% in cash terms in 2021-22—worth £2.2 billion—a real-terms increase. This will support the services that the public relies on, including children’s and adult social care.

Alongside this, we announced a package of measures to support local government in its response to the pandemic. For 2020-21, Government have delivered on their commitment to apportion irrecoverable tax losses from this year, by confirming that they will compensate councils for 75% of such losses. For 2021-22 we will provide un-ring-fenced grant funding of £1.55 billion; £670 million in recognition of the additional costs of providing local council tax support resulting from increased unemployment; and we will extend the existing sales, fees and charges scheme to include the first three months of 2021-22. We have good reasons to be optimistic about overcoming the spread of the virus. Nevertheless, we will continue to keep the covid-19 package under review.

I intend to bring forward proposals for the allocation of this funding in the provisional local government finance settlement, before the Christmas recess.

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