Paul Dossett, Head of Local Government, Grant Thornton UK LLP, commented:
“There were more spending commitments than expected in today’s Spending Review with budget increases announced across all departments, and an estimated average increase of 3% a year in core spending power for local government.
“This increased funding is by no means a silver bullet. According to our analysis of provisional government data, 79% of English councils overspent on their budgets in 2020/21 so, while new funding is clearly needed, how far a 3% increase will go is unclear.
“With an increase to the National Living Wage of 6.6% announced, inflation set to hit 4% and public sector pay increases re-instated, alongside normal council running costs, this increase is unlikely to be a game changer for the sector – with any increase absorbed by rising wages and other cost increases. The extra support will also vary by region and so, while it’s encouraging that we haven’t seen a direct return to austerity, tough decisions are likely to remain for the sector through the medium term in managing service and demand pressures.
“To support economic recovery the Chancellor also announced a number of discounts on business rates for certain sectors and those undertaking property improvements. While significant support for the business community, this will result in lost revenue for councils and they will need to seek assurance that the government will provide additional funding for this loss.
“The homelessness crisis remains the biggest variable in the sector. The new £639 million of funding announced for this today is likely to be a mere drop in the ocean compared to what’s needed to really tackle this growing crisis across the country.”