The Ministry of Housing, Communities and Local Government has announced that select councils experiencing significant financial difficulties will receive additional government support to aid in balancing their budgets for the upcoming financial year.

Thirty councils identified as facing exceptional circumstances will receive government assistance to ensure the continuous delivery of crucial public services, protection of community assets, and promotion of economic stability, aligning with the government's Plan for Change. This initiative underscores a commitment to helping councils manage their financial challenges without the need to sell off community and heritage assets.

Financial Commitments and Reforms

Earlier this month, the government confirmed an allocation exceeding £69 billion for local government for the next year. This funding represents a 6.8% increase in councils’ Core Spending Power compared to the previous year.

Included in this financial package is a new £600 million Recovery Grant targeted at councils that the Government says face higher demands for services due to deprivation.  The Rural Services Network believes that there are other causes of demands on services such as an ageing population.

Jim McMahon, Minister of State for Local Government and English Devolution, emphasised the government's awareness of the financial strains on councils and its determination to rebuild the foundational aspects of local government. The approach aims to foster a partnership with local councils, encouraging them to seek necessary support confidentially, ensuring a collaborative effort to enhance public services and economic conditions.

Long-Term Plans and Immediate Assistance

The government's long-term strategy includes reforming the current funding model by introducing multi-year financial settlements, starting in 2026-27, and revising the local audit system to increase transparency and stability in council finances.

Additionally, the Exceptional Financial Support (EFS) process, established in 2020, continues to be a vital resource for councils under severe financial pressure. This year, the government has made adjustments to make borrowing less costly for councils by removing the previous 1% borrowing premium, allowing for more manageable financial recovery.

Councils Receiving Support

The following councils have been confirmed to receive additional support, based on agreements in principle for the fiscal year 2024-25:

RSN Comment

The Government has been saying throughout the financial settlement that it will target money towards those places that need it most, introducing the Recovery Grant of £600Million which will target money towards areas with greater need and demand for services (using deprivation as a proxy for this).  It has removed the Rural Services Delivery Grant so that funding could be targeted towards areas with high need.  This has had the consequence of by and large, removing funding from rural councils and directing it towards highly populated urban areas.

However, we can see that not all of the councils receiving exceptional financial support are urban, only 80% are in the predominantly urban category of local authority, so we know that more rural areas are in financial difficulty and need support too.

40% of those authorities receiving exceptional financial support don’t even qualify for the Recovery Grant.

From the above list of 30 authorities, we see significant differences in core spending power increases too, with Birmingham at 9.8% increase and Newham at 10% increase, compared to Shropshire with an increase of only 3.8%, significantly below the ‘celebrated’ government statement that rural would see on average a 6% increase.

What we see from this allocation of exceptional financial support is that different types of authority are in need of support, and that the Government must ensure that all councils can meet the needs of their residents.