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Funding 'Boost' for Local Councils

on Monday, 26 April 2021.

The provisional local government finance settlement, announced in December, sets out how local councils will be supported financially for the year. The final settlement has been published and is due to be laid before the House of Commons for approval.

Councils can expect to receive £51.2 billion (an increase of £2.2 billion from last year) in 2021. These changes can be seen through the following initiatives:

  • £622 million for the New Homes Bonus scheme;
  • £111 million specifically to councils with responsibility for services such as homelessness, planning, recycling and refuse collection and leisure services;
  • £670 million to enable councils to continue reducing council tax bills for those struggling to pay
  • £4 million addition to the Rural Services Delivery Grant
  • £254 million to tackle homelessness and rough sleeping
  • £125 million to provide safe accommodation for victims of domestic abuse and their children
  • £15.8 billion for police forces to build back safer communities and cut crime.

Council Tax Veto

The Government has given local residents the power to veto excessive council tax rises. If there is a proposal to raise tax by 2% or more (with the exception to councils with the responsibility for adult social care, which will be able to set a further 3% increase) local residents are able to vote against such a decision.

Welcoming New Homes

The announcement also included further funding to help continue the New Homes Bonus scheme into 2021-22. This scheme incentivises councils to build more homes which in turn helps boost housing growth for the local area.


This lift in funding should come as a small victory as it is designed to help local councils further support the local people that need it the most. However, this announcement has received a large amount of negative feedback, with many questioning how achievable the Government's plan will be and whether the 'boost' will be as beneficial as described. Disappointingly, it has been noted that councils will only receive this full advantage of funding if they increase their council tax by the full 5%. Councils will have to make the difficult decision whether to increase this tax in order to fund such important services for their local area, whilst acknowledging this will not be a long-term solution.

It has also been argued that councils are in desperate need of clarity about how funding will be provided in future years to come, with the suggestion of a multi-year settlement to help local councils prepare. It is a positive step for the Government to continue the New Homes Bonus Scheme, but they must go further and work closely with councils when reviewing this scheme so they can plan for the future.

From loss of household income, to businesses suffering from cash flow problems, coronavirus (COVID-19) has placed a significant amount of pressure on local councils. It is therefore a step in the right direction for the Government to react and respond to these pressures. Although we are unsure how these changes will be implemented and how much of an impact they will have, as local councils become the 'fourth emergency service' during this pandemic, it is clear that appropriate funding is a high priority.

For further information on funding for local government, please contact Mark Heath in our Public Sector team on 07788 263256 or by filling in the form below.

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