Written evidence submitted by the Local Government Association [FSF 023]

 

1.           About the Local Government Association (LGA)

 

 

 

2.           Key messages

 

 

 

 

 

 

 

3.           Is the local government finance system fit for purpose? If not, what needs to change?

 

 

 

 

 

 

3.1. Does the local government finance system match funding to the relative needs of local authorities?

 

 

 

 

3.2. Does the funding system allow and incentivise local authorities to make sensible long-term choices about their finances and budgets, to better serve their residents?

 

3.3. How will this be affected by the introduction of multi-year funding settlements?

 

 

 

4.           Where are the most significant funding pressure in local government, and how does the finance system address them?

 

 

 

 

 

 

 

 

5.           Does the current statutory regime for identifying and responding to financial distress in local authorities support local authorities to get out of financial distress?

 

5.1. Have Government interventions in response to local authorities being in financial distress helped those local authorities to stabilise their finances and avoid further financial distress?

 

 

5.2. What should a broader support system for local authorities in financial distress look like?

 

 

6.           How much control do local authorities have over the levels of funding they receive, including from local taxation, business rates, central Government grants, and returns on commercial investments?

 

Simplification of grant funding streams

 

 

 

 

Adding flexibility to current funding streams

 

 

 

Council tax

 

 

 

 

 

Business rates and business rates retention

 

 

 

 

 

 

Sales, fees and charges income

 

 

6.1. What are the impacts of statutory restrictions preventing the use of capital returns (e.g. from asset sales) as revenue funding, and are those restrictions beneficial for local authorities?

 

 

 

 

7.           How much control do local authorities have over their costs, including on mandatory services (which they are required to deliver by statute) and demand-led services (for which the level of cost is determined by the needs of residents)?

7.1. Has the level of demand for local authorities’ services changed recently? If so, in which specific areas and why?

 

 

 

 

 

Table 1: Modelled cost pressures by service compared to 2024/25

 

Additional spend - 2025/26 compared to 2024/25 (£bn)

Additional spend - 2026/27 compared to 2024/25 (£bn)

Additional spend - 2026/27 compared to 2024/25 (%)

Children's social care

1.6

3.5

22.2%

Other education (incl. home to school trans.)

0.4

0.8

15.7%

Housing and homelessness

0.2

0.4

14.8%

Adult social care

1.8

2.8

11.3%

Central and other services

0.2

0.4

8.4%

Public health

0.2

0.3

8.2%

Planning and development

0.1

0.1

6.2%

Fire services

0.0

0.0

6.0%

Highways and transport

0.1

0.1

5.6%

Culture and leisure

0.1

0.2

5.6%

Environmental and regulatory services

0.1

0.3

4.6%

Total

4.7

8.9

12.5%

(Source: LGA analysis of multiple public data sources)

7.2. Where local authorities cut costs by reducing the services they pay for or provide, what services are most affected and what is the impact on residents?

 

 

 

 

 

 

 

Table 2: Modelled cuts and efficiencies by service – 2010/11 to 2022/23

 

Outturn net spend – 2010/11 (£bn)

Outturn net spend – 2022/23 (£bn)

Modelled cost pressures – 2022/23 (£bn)

Modelled cuts and efficiencies –2010/11 to 2022/23 (£bn)

Housing services

2.5

2.2

4.6

2.4

Culture and leisure

3.1

2.5

5.0

2.5

Highways and transport

3.8

2.8

5.4

2.6

Planning and dev. services

2.0

1.6

3.1

1.5

Environ. and regulatory

5.2

5.9

8.7

2.8

Fire services

 

0.4

0.4

0.5

0.1

Central and other services

3.1

4.0

5.2

1.3

Adult social care

15.7

20.5

27.1

6.6

Home to school transport

1.0

1.9

2.4

0.5

Children’s social care

8.4

12.8

16.3

3.5

Public Health (since 2016/17)

-

3.8

4.4

0.6

Total

45.3

58.3

82.8

24.5

(Source: LGA analysis of multiple public data sets. Methodology available on request)

(Notes: 1. Totals may not sum due to rounding. 2. Data shown is for London Borough Councils, Metropolitan Borough councils, Shire Counties, Shire Districts and Shire Unitaries. The Greater London Authority, standalone fire authorities, Combined Authorities, National Park Authorities and Waste Authorities are excluded. 3. Children’s social care is adjusted to include on Sure Start and services for young people from 2010/11 and throughout the time series)

 

January 2025

 

             


[1] This is a conservative estimate. We include modelled demographic pressure, but we do not factor in growing complexity of need over this period and any resulting impact on unit costs.