Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 2
2
Rejected
Paragraph: 17
Levelling Up funds fail to replace significant reductions in local authority revenue.
Conclusion
Local authorities’ revenue funding has reduced significantly since 2010. Levelling up funds generally do not replace grant funding because first they are capital not revenue and; second, because they cover specific projects rather than necessarily covering the priorities of the local authorities.
Government Response Summary
The government rejects the committee's conclusion, stating that local government's Core Spending Power has seen a real terms increase between 2019-20 and 2023-24. It clarifies that Levelling Up funds are not intended to duplicate core funding and cites the UKSPF as a predominantly revenue-based programme that offers local authorities flexibility.
Paragraph Reference:
17
Government Response
Rejected
HM Government
Rejected
The final Local Government Finance Settlement for 2023-24 makes available up to £59.7 billion for local government in England, an increase in Core Spending Power of up to £5.1 billion or 9.4% in cash terms on 2022-23. This boost in funding demonstrates how Government stands behind councils up and down the country. We recognise all councils are facing pressures, so we are introducing a one-off funding guarantee to ensure that every council sees at least a 3% increase in Core Spending Power next year before any local decisions on Council Tax rates. We are funding this by repurposing the Lower Tier Services Grant and a proportion of the New Homes Bonus underspend. Over the period of the last three spending reviews however (between 2019-20 and 2023-24), local government has seen a real terms increase in Core Spending Power. Aside from the issue of core funding, it is important to note that the Levelling Up funds are not intended to duplicate core Local Government funding; and not all are capital first. For example, the £2.6bn, UKSPF, is predominantly a revenue programme and has no requirement for local authorities to deliver specific projects. Local leaders are empowered to shape the design of funding, working in partnership with local stakeholders to select the most appropriate mix of interventions and tailor them to needs and opportunities. This can shift and change through the programme as local leaders see fit. The majority of places have chosen to use a significant proportion of their UKSPF allocations for revenue projects, meaning the programme includes more revenue overall.