Thank you for writing to me about local government spending power.
Let me start by saying that I fully recognise the important and tireless efforts undertaken by local councillors. They have a vital role in delivering essential public services and building stronger communities right across the country.
As laid out in the 2022-23 Local Government Finance Settlement, councils are expected to see a cash terms increase of over 4.5 per cent in Core Spending Power this financial year. This includes a new one-off £822 million grant to support all services delivered by local councils.
The Government has set out its plans for local government finance in 2023-24 and 2024-25, providing local authorities with greater clarity and control through a two-year settlement. Under the plans, the Government estimates that on average councils will see an increase of around nine per cent in their funding in 2023-24.
At the Autumn Statement 2022, the Chancellor announced additional flexibility for local authorities in England in setting council tax by increasing the referendum limit for increases in council tax to three per cent per year from April 2023. Local authorities with social care responsibilities will be able to increase the adult social care precept by up to two per cent per year.
I completely understand concerns about the impact of inflation on the provision of local services and the local government sector. That is why I stand firmly behind the Prime Minister in his commitment to halve inflation this year to ease the cost of living and give people financial security. Having spoken to colleagues, I am aware that the ways in which inflation interacts with local government finances are complex. Not all areas of local government expenditure will be sensitive to inflation, for instance, and some local authorities have multi-year contracts in place. I have been assured that the Government is working with the local government sector to understand the impacts of inflationary increases.
Thank you again for taking the time to contact me.
With best wishes.
Jonathan Lord MP
Member of Parliament for Woking