This briefing summarises and analyses the Local Government Finance Settlement for 2020-21, set to be debated in the House on Wednesday 12 February 2020.Jump to full report >>
On 6 February 2020, the Government published the final Local Government Finance Settlement for 2020-21. This lays out the Government’s proposals for funding local authorities in England in the coming financial year through central grants and redistribution of business rates. A motion to approve the Settlement will be debated in the House of Commons on Wednesday 12 February.
The final settlement follows a technical consultation in September 2019, and a provisional settlement that was published on 20 December 2019. The policy proposals in the final settlement are largely unchanged from those in these earlier proposals, and are (in summary):
The next Fair Funding Review, which will set the formulas used to distribute funding, is set to take effect from April 2021. Many of the final decisions in the Review have yet to be taken, so no firm figures are yet available for the effect on individual local authorities. However, the Government has said that it wants to introduce 75% business rates retention (up from the current 50%) and abolish revenue support grant.
Statistical analysis of this year’s Settlement shows that funding levels are effectively flat in real terms compared to 2019-20; however, this leaves most authorities well below the level of funding that they were receiving in 2015-16. In terms of core spending power – the Government’s estimated measure of the amount of money that authorities will have available for making decisions – most authorities are set to see an increase relative to last year, with some seeing levels of spending power above where they were in 2015-16.
Commons Briefing papers CBP-8818
Authors: Philip Brien; Mark Sandford; Matthew Keep