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Critiquing local government finance

  • by JW

“Highlighting the unfairness of the current funding formula for rural councils.” [Rural Services Network]

 The consultation on the settlement runs until 15th January.


The government has just published its provisional local government finance settlement for the next financial year. And there has been a bit of commentary happening since. 

The Local Government Association is not that impressed in its statement on provisional Local Government Finance Settlement:

“Today’s settlement does not provide enough funding to meet the severe cost and demand pressures which have left councils of all political colours and types warning of the serious challenges they face to set balanced budgets next year.”

The Institute for Fiscal Studies is also sceptical, saying the real pain is still to come:

Councils are set to see a 6.5% increase in funding next year. While rising costs mean this won’t stretch that far, the real pain will hit from 2025 on

The Community Care group notes that more council ‘bankruptcies’ are predicted as the government rejects calls for extra social care funding:

Experts are predicting that more councils will declare ‘bankruptcy’ after the government rejected calls for extra social care funding for authorities in 2024-25. Think tank the Institute for Government (IfG) made the claim after the provisional local government finance settlement included no extra resource for authorities beyond that already committed, despite leaders’ calls for extra cash.

And the Rural Services Network notes that the provisional settlement is still unfair for rural

The Provisional Local Government Finance Settlement was released on 18th December setting out the funding for Councils for the financial year 2024 to 2025. The consultation on the settlement runs until 15th January 2025, leaving councils little time to respond due to the Christmas and New Year break.

Despite representations from the Rural Services Network and rural MPs highlighting the unfairness of the current funding formula for rural councils, the settlement for 2024 to 2025 means that: Urban Councils will receive 37% MORE in Government Funded Spending Power (£142.09 per head) and Rural Residents will have to pay 20% MORE in council tax per head

In times of reducing public expenditure, it is more, rather than less, important to distribute the available resources between different areas fairly. It costs significantly more to deliver services across large rural areas. Interestingly in 2023, the Government published a document entitled ‘Unleashing Rural Opportunity’. With this settlement the result for rural areas will not be increased opportunity!