Government funding pledge 'falls well short' of what is required, say Shropshire councils

The provisional local government finance settlement was announced by Levelling Up Secretary Michael Gove on Monday, with the minister saying there would be an 'an increase of 6.5 per cent on 2023-24'.

But both Shropshire and Telford & Wrekin councils have painted a bleak picture in response to the announcement, saying the majority of the increase will be funded by a requirement for councils to raise council tax by the maximum permitted – 4.99 per cent – meaning only 1.5 per cent of the increase comes from the Government.

The situation comes amid increasing pressures on local councils, with nine having effectively declared bankruptcy since 2018 – including Nottingham and Birmingham in recent months.

A poll from the Local Government Association last month revealed that nearly one in five council leaders believe it is now “fairly or very likely” that their council will go bust in the next 15 months.

Responding to the announcement, Gwilym Butler, Shropshire Council’s Conservative cabinet member for finance, corporate resources and communities said: “The 6.5 per cent increase in funding includes an assumption that councils will raise council tax to the maximum allowed 4.99 per cent so it’s really a 1.5 per cent increase.

"We are still working through the detail but the reality is that overall this settlement falls well short of the level of support that we need to address the problems that we are facing, in relation to inflation and increases in the national living wage, as well as the specific challenges in areas such as adult social care, children’s services, SEND [special educational needs and disabilities] and SEND transport and housing and homelessness.

“We have worked really hard to make spending reductions by changing the way we do things but the increase in demand for our statutory services continues to grow at pace.

“There is no doubt that we will have to find more ways to reduce costs and inevitably this will mean making reductions to valued local services whilst having to raise council tax to the maximum.

“This is not a situation restricted to Shropshire, this affects every council, and I will be joining with other council leaders and asking our MPs to impress upon the Government the difficulties that local government faces."

Councillor Butler added: “In the current financial year, we have a spending reductions target of £51.4m and, thanks to a programme of transformation informed by The Shropshire Plan and our medium-term financial strategy, we have been able to identify £41m of this already.

“Our plans to 2025 are to build on these strong foundations, focusing on prevention and targeting our resources where they are needed most.”

Telford & Wrekin Council's Labour leader, Councillor Shaun Davies, who is also the leader of the Local Government Association, said the funding announced would "barely scratch the surface".

He said: “As with any announcement like this, the devil is in the detail. A first look at today’s announcement suggests that the Government is giving with one hand while taking away with the other – it includes an assumption that all authorities increase council tax by the maximum level permitted. The government has also cut the Services Grant by 84 per cent.

“Today’s announcement cannot undo ten years of austerity which has seen our Revenue Support Grant cut by 76 per cent, from £51 million in 2013 to just £12.4 million.

“The reality is that the headline funding increase will still fall well short of covering the soaring costs of social care in our borough – vital services which account for more than two thirds of our total budget.

“With one of the fastest growing and ageing populations in the country and inflation eating away at an already stretched budget, the additional funding will barely scratch the surface.”