Local Government Finance Settlement for England 2014/2015

Briefing Paper

The local government financial settlement for England for 2014/15 was announced as expected on 18th December 2013. Revenue Support Grant is being reduced by 9.4% on average in 2014/15 with further reductions in 2015/16 taking the total reduction to 13.2%. The government calculates that this will lead to an average reduction in spending power (taking account of other sources of income in local government) of 2.9% in 2014/15 and 1.8% in 2015/16. Last year the government stated that this year’s reduction in spending power for local authorities would be 1.7%. The largest reductions in spending power at 6.9% in 2014/15 are for Chesterfield Borough Council and East Lindsey District Council; with reductions generally being greatest in London, Metropolitan and urban areas.

The Secretary of State has suggested that local authorities can manage with these reduced resources by ‘cutting waste and making sensible savings’. However, everyone I know who is involved in local government is agreed that the local government financial settlement will force councils to make significant reductions in front-line services and that some may even find their financial viability threatened.

Communities Minister Brandon Lewis said this settlement is ‘fair to all parts of the country’ but Labour said services would suffer and some councils could be stretched to ‘breaking point’.

The draft local government financial settlement is currently out for consultation with a deadline for responses of 15th January 2014. However, past experience under successive governments suggests that whatever representations are received the final settlement will not differ significantly from the draft settlement.

This briefing paper summarises the local government financial settlement and reactions to it in the sector and provides some commentary.

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