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Nottingham Labour

Reaction to final Local Government Financial Settlement

The government has announced it’s final Local Government Financial Settlement. To the great surprise of no one, this settlement is nowhere near enough to meet the rising demands and costs of Local Government Financing. While the package includes an extra £600 million to support council budgets, this is a drop in the ocean of the overspend that faces councils. The local government finance settlement even when topped up by the extra £600 million still leaves councils across the country on the edge of financial collapse, unable to provide statutory services that residents rely on.

In the last six years, eight local authorities including Nottingham have had to issue Section 114 due to severe financial distress. In the eighteen years priors, no councils issued a section 114. The driver for this is twofold: over a decade of cuts and neglect from the Conservative Central Government, and demand being driven higher than ever before. The main area of soaring costs is in Adults and Children’s services. Rising demand for residential care coupled to a failing marker for provision has caused costs to skyrocket. It is completely unacceptable that there are companies making obscene profits from housing vulnerable children.

Homelessness has also led to further pressures on budgets. The amount of residents in temporary accommodation due to being unable to afford rent has climbed dramatically in the past year. This has been made worse by the government’s decision to free local housing allowance at April 2020 levels. As rents have spiralled, it has made most private rental properties unaffordable to those receiving housing benefit. The only long-term solution to this is building more social housing, so that all can have an affordable suitable place to live. However, the government have shown no willingness over the last decade to work towards more social housing, and they have done next to nothing in the short term to tackle soaring homelessness and increased rents.

As this increased demand on services increased costs, Local Authorities across the country are still reeling from the impact of a decade of Tory cuts. Over the past ten years, we receive £100 million less each year than we did before 2013, representing a loss of a billion pounds. There is £694 less funding per resident each year. These cuts have meant that early prevention in areas like Children’s have been hamstrung. The result of this is increased costs to the council as resources are focused at the crisis end of services, where the costs are highest.

In light of the Local Government Finance Settlement failing to help councils set a robust balanced budget, Nottingham Labour is calling on the government, and on any future governments to reform Local Authority financing. It is clear to all that the system is not working, that the current situation is unsustainable and that the people of Nottingham and the country deserve properly funded, reliable council services.