Councils warn cash ‘running out fast’ after Government confirms tax rise limit

Local authority leaders have warned that money for local services is “running out fast” after the Government confirmed that it would allow council tax rises of up to 3% in the next financial year.

Communities Secretary James Brokenshire confirmed on Tuesday that the local government finance settlement would see their “core spending power” increase by 2.8% from £45.1 billion in 2018/19 to £46.4 billion in 2019/20.

The figures were provisionally released in December.

In a written ministerial statement issued on the same day as the latest round of Brexit votes, Mr Brokenshire told MPs that it would lead to “a more self-sufficient and reinvigorated system of local government”.

But Lord Porter, chairman of the Local Government Association (LGA), said despite more cash announced in the Autumn Statement councils were facing a funding gap of more than £3 billion this year.

He said: “The money councils have to provide local services is running out fast and there is huge uncertainty about how they will pay for them into the next decade and beyond.

“The upcoming Spending Review is absolutely crucial for councils.

“If we truly value our local services then we have to be prepared to pay for them.

“Fully funding councils is the only way they will be able to keep providing the services which make a difference to people’s lives, such as caring for older and disabled people, protecting children, building homes, fixing roads and collecting bins.

“Investing in local government services will also help reduce pressure on other parts of the public sector, such as the NHS, and save money for the public purse.”

In the statement, Mr Brokenshire (pictured) revealed that while authorities would face a 3% ceiling on council tax rises, a cash-strapped Tory council would be given a “flexibility” to increase it by another 2%.

Northamptonshire Council was allowed to use money from asset sales to plug a £70 million hole in its day-to-day budget in November, having signalled the previous February that it had effectively run out of cash.

Mr Brokenshire said the additional measure for the Midlands council would “assist with the improvements to council governance and services after their serious issues”.

Regarding the overall settlement, he wrote: “This settlement recognises the pressures that councils face in meeting growing demand for services and rewards their impressive efforts to drive efficiencies and help rebuild our economy.

“This settlement answers calls for additional funding in 2019-20, and it paves the way for a more self-sufficient and reinvigorated system of local government.”

Copyright (c) Press Association Ltd. 2019, All Rights Reserved. Picture (c) Yui Mok / PA Wire.