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£53.9bn government funding for councils to help level up country

Councils in England will receive £53.9bn in funding for the coming financial year, including more than £1bn of additional funding for social care, the government has announced. 

The package represents the largest cash-terms increase in grant funding for 10 years and makes an extra £3.5bn available compared to 2021-22, including a grant worth £822m for councils to spend as they see fit to best meet local needs.  

The government said the funding set out by the Department for Levelling Up, Housing and Communities (DLUHC) will enable councils to continue to deliver vital services and look after the most vulnerable in their communities.

It will also support councils to play a significant role in the government’s levelling up agenda as the country builds back better from the Covid-19 pandemic. 

At the same time, the settlement will protect residents from excessive council tax increases, the government said.

From next year, the amount council tax can be increased by without a vote has been reduced to 2%, with an extra 1% for councils with adult social care responsibilities.  

Commenting, Secretary of State for Levelling Up, Michael Gove said:  

“Councils continue to deliver for their communities and have a major role to play in our central mission of levelling up the country. 

 “Today’s funding package represents a real-terms increase from last year’s settlement and will make sure councils can improve vital frontline services, support vulnerable people and protect residents from excessive council tax rises as we build back better form the pandemic.” 

The Provisional Local Government Finance Settlement includes: 

  • More funding for social care: The government is making more than £1bn of additional funding available for social care, ensuring councils can improve conditions for carers and those in need. In addition, £162m will be allocated to prepare councils for social care reform and to help move towards providing a fair cost of care. 
     
  • Preventing excessive council tax rises: Residents will continue to have the final say over excessive council tax increases. From next year, the amount council tax can be increased without a vote has been reduced to 2%, with an extra 1% for councils with adult social care responsibilities. 
     
  • New Homes Bonus: £554m has been allocated to English councils in 2022/23. This brings the total amount of funding awarded under the New Homes Bonus to £10bn, which has seen over 2.3 million additional homes being built, of which more than 560,000 are affordable homes. The government said they remain committed to reforming the New Homes Bonus to improve how housing growth is incentivised and that their response to the consultation on the New Homes Bonus will be published in the coming months. 
     
  • Lower Tier Services Grant: Providing £111m to councils with responsibility for services, such as homelessness, planning, recycling and refuse collection, and leisure services. The funding floor has been updated so that no council will have less funding available in 2022/23 than this year. 
     
  • Continued support for rural areas: The government said they recognise that rural areas can face additional cost pressures, which is why the £85m Rural Services Delivery Grant will continue to be provided. 
     
  • Business Rates Retention pilots: Continuing the 100% Business Rates Retention pilots in Cornwall, Greater Manchester, Liverpool, the West Midlands and the West of England, and 67% Business Rates Retention for London councils, enabling them to control more of the money they raise locally.
     
  • Revenue Support Grant: An uplift to the Revenue Support Grant in line with inflation, worth over £70m. 

The government said they are committed to ensuring that funding allocations for councils are based on an up-to-date assessment of their needs and resources.

The data used to assess this has not been updated in a number of years, dating from 2013-14 to a large degree, and even as far back as 2000.

Over the coming months, DLUHC will work closely with the sector and other stakeholders to update this and to look at the challenges and opportunities facing the sector before consulting on any potential changes.

As part of this, options will be considered to support local authorities through transitional protection.

The government said councils should note that one off grant funding provided in the Local Government Finance Settlement in 2022/23 will be excluded from potential transitional protections.

The provisional settlement consultation will be open for four weeks and will close on 13 January 2022.

After this, the government will provide confirmation of the final local government finance settlement.

In addition, the Home Office has published the Provisional Police Funding Settlement, which includes setting out funding allocations for Police and Crime Commissioners.

The policing system will receive up to £16.9bn to tackle crime and recruit more Officers in 2022/23, a £1.1bn increase on last year.

PSE will be hosting a Learning & Development virtual event on 3 February 2022. Join us for the full day event by registering here.

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