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Local government finance settlement: Javid announces £150m care fund

The housing and communities secretary has today revealed details of this year’s local government finance settlement, including £150m of extra funding for adult social care.

Sajid Javid made the announcement this morning, while also unveiling a further £31m for rural services, almost double the amount detailed in draft settlements.

The news has received mix responses, although many commentators have applauded government efforts to deal with the projected £2.3bn funding gap expected to develop by 2020.

In his statement to parliament, Javid said the further social care funding would not affect the commitments made to other areas of local government because the money will be taken from “anticipated underspend in existing departmental budgets.”

The secretary also confirmed the continuation of the social care precept, meaning councils can charge a further tax on residents, with returns specifically earmarked for social care.

Initial reactions to the draft settlement were focused heavily on the lack of extra funding for rural areas, with the County Council Network (CCN) claiming that county authorities were subject to a 50% drop in funding last year compared to city councils.

However, today’s settlement has been hailed by the CCN for providing greater funding to deal with rural issues.

Cllr Paul Carter, the group’s chairman, said: “The announcement of funding for upper-tier authorities and rural districts shows that CCN has secured additional resource for councils of all types.

“We welcome the government listening to our case and providing local government with much-needed extra resource to go towards meeting the rising costs in social care, particularly in counties, who have unique pressures as they are home to the largest and fastest growing elderly populations.”

In comparison, Lord Porter, chairman of the LGA, said the government had not gone far enough to improve the situation for councils. He claimed that the extra funding would only solve issues temporarily and again urged ministers to allow authorities to keep 100% of business rate receipts.

“The additional one-off social care funding announced today is a temporary measure and needs to be compared against an annual social care funding gap of £2.3bn by 2020,” he commented.

“Core central government funding to councils will be further reduced by half over the next two years and almost phased out completely by the end of the decade. We have warned that councils also face an unprecedented surge in demand for children’s services and homelessness support. This is leaving increasingly less money for councils to fund other services, like fixing potholes, cleaning streets and running leisure centres and libraries.

“Councils in England face an overall funding gap that will exceed £5bn by 2020. We remain clear that the government needs to allow local government to keep every penny of business rates collected to plug this growing funding gap and provide the £1.3bn needed right now to stabilise the care provider market.”

Javid confirmed that councils would be allowed to keep more of the money brought in through business rates – about 75% by 2019-20 – while the government works to implement a more complete retention programme by 2021.

Porter also said errors in the Valuation Office Agency data used to calculate the charges and awards councils will be subject to from the tariff business rates system meant more than half of councils would receive less money.

He went on to say that authorities should not be penalised for the mistake and that the LGA would “continue to call on the Treasury to use the central share of business rates to ensure that no council receives less than what they have been planning for.”

As well as introducing new funding streams, Javid also committed to continue the New Homes Bonus, a payment given to councils in response to new homes being built.

The secretary said there would be around £950m set aside to be used as part of the bonus this year, with the baseline maintained at 0.4%.

Top image: Foreign Office

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