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Local government funding

Statement made on 9 February 2017

Statement UIN HCWS470


Further to the points raised in the House yesterday on Surrey County Council and local government finance, I would like to take the opportunity to put some facts on the record.

Surrey County Council’s budget and council tax is a matter for the council. Surrey’s elected councillors voted through their 2017/18 budget on Tuesday 7 February, based on the draft Local Government Finance Settlement. Surrey County Council have been clear that their Budget decision (setting a level of council tax which is not above the referendum threshold) was theirs alone.

As part of the statutory draft Local Government Finance Settlement consultation, the Department for Communities and Local Government discusses local government funding with councils across the country, of all types and all political colours. This happens every year, and necessarily involves councils making direct representations to the Government.

DCLG will publish the final settlement later this month, and the House of Commons will then vote on it. This is entirely transparent, and detailed funding figures for every council are published as part of that process.

Whilst the final settlement has yet to be approved, the Government is not proposing extra funding to Surrey County Council that is not otherwise provided or offered to other councils generally. There is no ‘Memorandum of Understanding’ between Government and Surrey County Council. In the draft Settlement published in December, Surrey’s core spending power is forecast to rise by 1.4 per cent from 2015/16 to 2019/20. We believe this provides a sustainable base on which the council can plan ahead and allocate their £1.7 billion a year budget.

We are, however, conscious of the medium and long-term pressures that all councils face from a growing and aging population. The Government is therefore delivering broader reforms to local government finance – through bespoke Devolution Deals, the integration of health and social care, a Fairer Funding Review, medium and longer-term reforms to support adult social care, and the move, from 2019/20, to 100 per cent business rates retention across the country. All these reforms have been discussed in recent weeks with Surrey and other councils from across the country as part of the Local Government Finance Settlement process.

The Local Government Finance Bill, that Parliament is at present considering, will legislate to deliver the reforms to business rates. A number of pilots are already taking place from April 2017 in combined authorities and unitary councils across the country. These will take place in Liverpool, Greater Manchester, West Midlands, West of England, Cornwall and Greater London. The Government plans to undertake further pilots in 2018/19, in areas without a devolution deal, including two-tier council areas. The nationwide rollout will then take place across England in 2019/20.

Surrey County Council informed the Government that they wished to become a pilot area. The Secretary of State for Communities and Local Government told them that this was not possible for 2017/18, but said that, subject to due process and meeting the necessary criteria, they could participate in the 2018/19 pilot. All other councils will be free to apply to participate in these pilots, and the Government invites them to do so. The Department for Communities and Local Government has already held discussions about the 2018/19 pilots with several councils and it will be publishing more information shortly.

The Government’s wider reforms to local government funding will make councils less dependent on money from Whitehall, ensuring all councils have strong incentives to support local jobs and local firms, and directly benefit from the proceeds of a growing economy.

Linked statements

This statement has also been made in the House of Lords

Department for Communities and Local Government
Local government funding
Lord Bourne of Aberystwyth
Parliamentary Under Secretary of State for Communities and Local Government
Conservative, Life peer
Statement made 9 February 2017