Spending Review 2020 and impact on local government

Paul Dossett, Head of Local Government, Grant Thornton UK LLP, commented:

“Today’s Spending Review confirmed the Chancellor’s statement that we would not see a return to austerity measures for the local government sector next year. With over £3 billion additional funding announced for 2021/22 to help deal with the ongoing effects of COVID-19, and an expected 4.5% increase to local government spending power.

“Whilst this increase in spending power will be welcomed by town halls, only £300 million relates to additional grant funding, specifically for social care. The remainder relates to a 3% adult social care precept, with no change to councils being able to increase their council tax bill by 2% without needing to hold a referendum. This is a missed opportunity to provide the much needed financial sustainability for the sector, pushing the decision on to individual councils to decide on setting Band D council tax levels; which will be a difficult decision to make given the pandemic’s impact so far on local economies and tax payers.

“Whilst he announced pay rises for the NHS, the majority of the rest of the public sector will see a pay freeze in 2021/22 – apart from those earning less than £24,000. Whilst there will be those in local government, such as care workers, who will fall into the category of pay rises, others working in the sector may feel that their contribution in responding to the COVID-19 pandemic so far has been overlooked.

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“More positively, a new £4 billion levelling up fund was announced, to invest in local infrastructure and help to support with local recovery during this parliament. The new fund will be jointly managed by HMT, MHCLG and DfT and will complement the existing £3.6 billion MHCLG Towns Fund programme. It will be critical that the government departments involved ensure an equitable and efficient deployment of this grant across the country, as it progresses.”


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