25.10.18

Local authorities given set dates for financial settlements

The date that councils will receive their local government finance settlement for 2019-20 has been announced as 6 December.

This follows the announcement by the Ministry of Housing, Communities & Local Government that they will aim for local authorities to receive their provisional and final local government finance settlements on a set day each year, which will allow them to plan their budgets with more certainty.

Rishi Sunak outlined the decision in a response to an independent review into the ministry’s oversight of the business rate system, led by former director general at HM Treasury Andrew Hudson.

The review found that the ministry’s process for managing the government finance system needed to be strengthened and made the recommendation in anticipation of the Fair Funding Review, the 2019 Spending Review, and changes to business rates at a time when councils up and down the country are having to cut services.

Hudson’s review said: “The later policy decisions are taken, the greater the risk that there will be difficulties in implementing changes.”

It found that the timetable for announcing provisional and final local government settlements has moved later in the year over the past few years, which it says allows “less time for scrutiny and for local authorities to set their budgets.”

It recommended that future provisional settlements take place on 5 December, with the final settlement announced no later than 31 January.

In a letter to the chair of the Housing Select Committee, Sunak confirmed that the ministry would accept all of Hudson’s recommendations, and said that the department is aiming to publish next year’s provisional financial settlement on 6 December 2018.

Sunak said: “I thank Andrew Hudson for carrying out this thorough review. We accept his recommendations, and have already taken steps to ensure their implementation.

“We recognise taking a more planned approach towards the provisional local government finance settlement in future will be fundamental to ensuring local authorities are given more certainty, and the time and space to consider their financial positions for the coming year.

“With this in mind we will aim to publish the provisional and final settlements on or around the same dates every year from this December.”

The ministry commissioned the review after some councils involved in a business rates pilots were overpaid a total of £36m.

Last year, council leaders warned that the local government settlement would leave over two-thirds of councils searching for unexpected savings in 2017-18.

Its now estimated that funding pressures and rising demand for services will see local authorities in England facing a £3.9bn funding black hole by next year.

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