Local government has a well-documented revenue problem but capital cannot be forgotten about either

Local government is compelled to focus on the immediate problems staring it in the face, the impact of the cuts of the last decade can’t be forgotten. However, longer-term issues that require investment need to also be considered before they creep up and get past the point where they are resolvable.

Looking at revenue firstly, the announcements in the Comprehensive Spending Review were welcomed, £4.8B additional grant over 3 years plus the ability to raise a further £3.7B through council tax and precepts over the period. However, looking at the pressures on the sector with rising demand, inflation, pay increases and the impact of the national insurance rise then in reality this probably equates to at best a standstill position.

APSE’s Local Government Commission 2030 called for a longer-term settlement whilst fair funding was addressed, immediate moves to tackle the social care funding crisis, an end to competitive bidding pots and reform of business rates. Progress is being made but we all know that it hasn’t gone far enough, or fast enough, to resolve the systemic problems of finance, and it remains unclear as to whether fair funding will ever be reviewed!

Michael Gove’s recent comments recognising that the notion of self-financing for councils through local tax sources alone is unworkable, is welcomed. Ingrained low economic bases in many deprived areas of the country make this impossible to resolve without significant redistribution. Anything less would fly in the face of any notion of levelling up. The Secretary of State’s acknowledgment that grant based on need will remain in place for the next three years is therefore reassuring. That said, we will await a longer-term alternative approach to local government finance reform with interest.

And of course, we shouldn’t forget about capital, particularly given the challenges ahead around decarbonising local infrastructure and assets. Many councils have set ambitious net zero targets that will require huge investment in the coming years in order to achieve these goals. Whilst specific funding announced in the Government’s net zero strategy is welcome it seems inadequate to meet the scale of the challenge faced in the timescale required.

Councils will await with interest December’s annual financial settlement to see where funding lands at the local level. Will this signify the beginning of significant attempts at levelling up? Many will hope so.