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Cash-strapped councils “not out of the woods” after Jeremy Hunt’s Autumn Statement

There needs to be a long-term funding plan to protect services, says the Local Government Association.

By Harry Clarke-Ezzidio

Despite being given additional power to raise council tax, and more money to provide adult social care services, a lack of long-term funding for local authorities in the Autumn Statement means that councils are “not out of the woods” and will have to make some difficult decisions, the chairman of the Local Government Association (LGA) has warned.

Prior to Jeremy Hunt’s statement on 17 November the LGA said that councils faced an “existential crisis”, with a £2.4bn shortfall in budgets due to inflation this year. The extra funding that councils will now have access to means, however, that the Autumn Statement proved “better than many of us councillors feared”, said James Jamieson, the chairman of the LGA and Conservative leader of Central Bedfordshire council.

The £3bn that will be made available to councils, said Jamieson, will be made up approximately equally of the additional funding for social care announced by the Chancellor, and the decision to allow local authorities to put council tax up by 5 per cent without the need for a local referendum.

“We were saying that we really needed about £3.4bn to maintain [services] where we are – it’s not a great place where we are – and if councils took the full benefits of the council tax rise, we would [have] about £3bn,” Jamieson told Spotlight. “So we are definitely in a better position than we feared. But we still have concerns.”

Those concerns relate to the lack of a long-term funding settlement between the government and councils. Short-term funding arrangements have become common practice, which can be partly attributed to events such as the pandemic and the invasion of Ukraine taking centre-stage, argued Jamieson, but now there is an urgent need for “long-term sustainable funding”.

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Following the statement, councils have an indication of where their finances will be for the next two years but beyond that is uncertain, Jamieson said. “With the pressures that we have in adult social care and children’s [care], and other pressures within councils – bearing in mind that around 90 per cent of our services are statutory – we do need a long-term funding settlement, where we know that we will have adequate funding,” he said.

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To pay for it all, everyone’s council tax is likely to rise. The Treasury predicts that 95 per cent of councils will utilise their new power. They have no choice, Jamieson said: “Without that 5 per cent council tax [rise], it’s very clear that there won’t be enough funding. So it would be my expectation that a significant number of councils would need to go for the 5 per cent – which in these tough times will be difficult for our residents.”

Jamieson acknowledged the Office for Budget Responsibility’s report on the Autumn Statement, which predicted that household disposable incomes would fall by 7 per cent over the next two years, the biggest decline on record. He said that the decision to raise benefits and pension in line with inflation was “very important”, but that “there is a real worry that, rather than things getting better, we [councils] are going to have to work really hard just to maintain services where we are”.

There is an overarching positive interpretation of the statement, Jamieson believes: that the government is beginning to acknowledge that “council funding [is] linked to the NHS and education, and recognised that this is an area that we cannot keep cutting”.

“I think that it’s very important that we’re not seen as the easy option for savings,” Jamieson added. “Have we got everything we want? Absolutely not. Are we going to face tough times? Yes, we are. But we haven’t been done-to in the way that we have been at times in the past.”

[See also: “The wolf is still at the door”: council leaders on the Autumn Statement]