‘Unthinkable’: councils say £64bn settlement not enough to meet ‘severe’ pressures

Mr Davies said: “The funding uplift announced by the government today [Monday] assumes that all councils will increase their council tax bills by the maximum allowed in 2024-25. 

“This means councils are again left facing the difficult choice about raising bills to bring in desperately needed funding.

“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.

“Councils in England continue to face a funding gap of £4bn over the next two years, as today’s announcement does not change the funding gap facing councils this year and next.

“It is therefore unthinkable that government has not provided desperately needed new funding for local services in 2024-25.”

He urged the government to “urgently” address the growing financial crisis facing councils and “come up with a long-term plan to sufficiently fund local services through multi-year settlements”.

Despite the increased funding, London Councils anticipates a continuing funding shortfall of at least £500m. 

It said it had asked the government for a funding uplift of at least 9%. 

The cross-party group said that while the government’s announcement of a 6.4% funding boost for London local authorities will bring some relief, it will not be enough to address all the “skyrocketing costs and financial distress” boroughs are experiencing.

It said boroughs are already dealing with a £600m funding shortfall this year, with nine in 10 expecting to overspend their budgets.

“The worsening homelessness crisis is a key factor driving boroughs’ budget instability. 

“One in 50 Londoners is currently homeless and living in temporary accommodation arranged by their local borough. 

“Boroughs expect to overspend on their homelessness budgets this year by nearly £150m,” London Councils said in a statement. 

Claire Holland, acting chair of London Councils, said: “We are deeply concerned 2024 looks set to be another year of massive budget pressures and a continuing squeeze on Londoners’ local services.

“The measures announced by the government fall short of what we need. 

“While the funding deal will bring some relief, it won’t be enough to plug the budget gaps we face and restore stability to town hall finances.

“Much of this uplift also relies on council tax rises, which will be extremely difficult for Londoners struggling with the cost of living.

“The entire system of local government funding needs urgent reform. 

“For too long, boroughs in the capital have been left with inadequate resources despite London’s population and demand for services growing fast.”

DLUHC did not comment on the concerns, but did refer to the statement released on Monday.

Announcing the settlement, Mr Gove said: “Councils are the backbone of their communities and carry out tremendous work every day in delivering vital services to the people they serve.  

“We recognise they are facing challenges and that is why we have announced a £64bn funding package to ensure they can continue making a difference, including through our combined efforts to level up.”

The consultation on the provisional settlement will be open for four weeks, closing on 15 January 2024.