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United Kingdom : James Brokenshire confirms funding package for local authorities in 2019 to 2020.

Councils in England are to benefit from increased funding for core services including additional support for the most vulnerable in society, Communities Secretary Rt Hon James Brokenshire MP confirmed today (5 February 2019).

Local authorities core spending power will rise in 2019 to 2020 by 1.3 billion, taking councils funding to 46.4 billion.

This years local government finance settlement includes extra funding for local services with a strong focus on greater support for adult and childrens social care. The settlement also supports and rewards economic growth and sets out reforms for a sustainable path for the future funding model for local government.

The real terms funding increase for 2019 to 2020 is in recognition of the pressures local authorities are facing to deliver the services residents need, whilst protecting taxpayers from excessive increases in bills.

The 2019 to 2020 settlement marks the end of a 4-year deal accepted by 97% of councils which provided local authorities with access to 200 billion in the 5 years to 2020.

Communities Secretary Rt Hon James Brokenshire MP said:

This years settlement paves the way for a fairer, more self-sufficient and resilient future for local government. That is why local authorities will have more control over the money they raise and a real terms increase in their core spending power.

The settlement also recognises the pressures councils face in meeting growing demand for services and rewards their impressive efforts to drive efficiencies and rebuild our economy.

Provisional plans for the local government finance settlement for 2019 to 2020 were published in December followed by a period of extensive consultation with the sector. Representations from around 170 organisations and individuals were carefully considered before finalising the settlement.

The final local government finance settlement for England, 2019 to 2020, will be debated in the House of Commons with a vote by all MPs on Tuesday 5 February.

This years Spending Review will determine funding for local authorities from 2020 onwards.

What the financial settlement includes:

Additional support for social care

The government committed 650 million more for social care for 2019 to 2020 in the Autumn Budget. This includes 240 million towards easing winter pressures on adult social care, with local authorities able to use the remaining 410 million on adult or childrens social care, and, where necessary, to relieve demand on the NHS.

This additional funding, alongside the adult social care precept and the improved Better Care Fund, means the government will have given councils access to 10 billion in dedicated funding which can be used for adult social care in the 3-year period from 2017-18 to 2019-20. For 2019 to 2020, local authorities will have access to 4.3 billion in dedicated resources for adult social care, including 1.8 billion in improved Better Care Fund Grant.

The Budget also confirmed 84 million is available, over 5 years, to drive improvements in social work practice and decision-making in childrens social care. The additional funding is part of the governments measures to address pressures in services helping societys most vulnerable.

Business rates pilots

To test out aspects of proposed business rates retention reforms in a wide range of areas across the country, the selection of 15 areas as 75% retention pilots for the 2019 to 2020 financial year has been announced.

Communities Secretary Rt Hon James Brokenshire MP has confirmed London will be piloting 75% rates retention in 2019 to 2020.

And as previously confirmed, pilots originally launched in 2017 in devolution deal areas will continue on the existing basis in 2019 to 2020.

The pilots will inform the governments proposed reforms ahead of a renewed business rates retention system being introduced in 2020 to 2021.

Business rates levy account surplus to be redistributed to councils

Local authorities play a key role in supporting economic growth.

The current business rates retention scheme is performing well, with local authorities estimating in 2018 to 2019 they will keep around 2.4 billion in business rates growth, on top of settlement funding.

As a result of increased growth in business rates income, the government has announced it plans to distribute 180 million of the business rates retention levy surplus to all local authorities and proposes to share it on the basis of need.

Future of business rates retention

The government is aiming to increase the level of business rates retention from the current 50% to 75% from 2020 in a way which is fiscally neutral. It is also intending to implement reforms to the business rates retention system to ensure local councils have the levers and incentives they need to grow their local economies.

A consultation, launched in December, is seeking views until the 21 February on the proposed reforms. It seeks views on how the business rates system can be reformed to continue to provide a strong incentive for local authorities to grow their business rates bases. It proposes a change in how the system is administered to mitigate the volatility business rates appeals have on local authorities income and to help reduce complexity in the system.

Review of relative needs and resources

Having consulted last year on a review of local authorities relative needs and resources, the next stage of consultation ahead of the reviews planned implementation in 2020 was announced at the provisional settlement in December and will run to 21 February.

This continues the governments work to address concerns about the fairness of current funding distributions by determining a robust and effective funding formula.

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Publication:Mena Report
Geographic Code:4EUUK
Date:Feb 6, 2019
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