Thank you for contacting me about local government spending power.
As laid out in the 2022-23 Local Government Finance Settlement, councils are expected to see a cash terms increase of over 4.5 per cent in Core Spending Power this financial year, meaning that up to £54.1 billion will be available. This includes a new one-off £822 million grant to support all services delivered by local councils.
The 2021 Spending Review committed to providing local authorities with around £1.6 billion of new grant funding in each of the next three years. This includes funding for family help services as well as over £37 million of additional funding to tackle cyber security challenges facing councils and invest in local authority cyber resilience.
At the Autumn Statement 2022, the Chancellor announced additional flexibility for local authorities in England in setting council tax by increasing the referendum limit for increases in council tax to three per cent per year from April 2023. Local authorities with social care responsibilities will be able to increase the adult social care precept by up to two per cent per year.
I completely understand concerns about the impact of rising inflation on the provision of local services and the local government sector. Having spoken to colleagues, I am aware that the ways in which inflation interacts with local government finances are complex. Not all areas of local government expenditure will be sensitive to inflation, for instance, and some local authorities have multi-year contracts in place. I have been assured that the Government is working with the local government sector to understand the impacts of inflationary increases.
Finance settlements for local government are set out each financial year, with a draft statement made available for local authorities and other interested bodies to comment on before the settlement is finalised. Ahead of the upcoming settlement for 2023-24, I am assured that the Government will be engaging extensively with the sector.
I know that, like me, Ministers completely understand the importance of providing certainty to local government, particularly in the context of rising prices and inflation.
Thank you again for taking the time to contact me.
Craig Whittaker MP
December 2022