Neighbourhood Services: Government Funding

This House of Lords Library Briefing has been prepared in advance of the debate due to take place on 24 October 2019 in the House of Lords on the motion moved by Lord Greaves (Liberal Democrat), “that this House takes note of the levels of government support for neighbourhood services provided by district councils and other local authorities”.

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Local authorities provide a range of services to their residents, some of which are mandatory (ie statutory duties) while others are discretionary. Mandatory services include: waste collection; library services; child and adult social care; public health services; and road and pavement maintenance. Discretionary services include leisure services and some forms of pest control, such as the removal of wasp nests.

Local authorities receive most of their income from three sources: council tax receipts; retention of business rates; and central government funding grants. Central government funding is primarily allocated through the annual local government funding settlement. In recent years there has been debate about the pressures on local government finances caused by reductions in central government funding, combined with an increase in demand for some services. In March 2018, the National Audit Office (NAO) report Financial Sustainability of Local Authorities 2018 stated that between 2010/11 and 2017/18, central government funding to local authorities reduced by 49.1% in real terms and was projected to have reduced by 56.3% by 2019/20. The report found that while many local authorities had sought to protect their child and adult social care services, some other services had seen “substantial reductions” in spending. However, analysis by the Local Government Association found that although residents’ rates of satisfaction with a range of council services had declined over this period, residents’ overall satisfaction with their council had remained broadly “positive”.

In January 2019, the previous Conservative Government announced details of the final local government funding settlement for 2019/20. In a written statement to the House of Commons, the then Secretary of State for Housing, Communities and Local Government, James Brokenshire, acknowledged “the pressures that councils face in meeting growing demand for services”. The settlement forcast that the core spending power of local authorities would “increase from 45.1 billion in 2018/19 to 46.4 billion in 2019/20, a cash-increase of 2.8% and a real-terms increase in resources”. The 2019 spending round, announced by the Chancellor, Sajid Javid, In September 2019, included “more than 3.5 billion of additional resources” for local authroities in 2020/21. This included a £1 billion grant for child and adult social care.

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