Consultation outcome

Provisional local government finance settlement 2021-22 consultation: summary of responses

Updated 10 February 2021

1. Introduction

1. The Ministry of Housing, Communities and Local Government published the provisional local government finance settlement for 2021-22 on 17 December 2020. The consultation closed on 15 January 2021.

2. The provisional settlement proposed:

• a uniform percentage increase in 2021-22 Revenue Support Grant allocations, based on the change in the Consumer Price Index

• a package of council tax referendum principles including a core principle of up to 2%, a bespoke council tax referendum principle of up to 2% or £5, whichever is higher, for shire district councils, and an adult social care precept flexibility, for local authorities with responsibility for adult social care, of 3% on top of the core principle

• increasing the Social Care Grant for 2021-22 by £300 million, on top of last year’s total of £1.41 billion for adult and children’s social care. These resources are distributed using the Adult Social Care Relative Needs Formula, including a sum of £240 million for equalisation of the impact of the adult social care council tax precept

• maintaining the improved Better Care Fund at 2020-21 cash terms levels (£2.1 billion), with the distribution unchanged

• a new round of New Homes Bonus (NHB) payments in 2021-22, which will not attract new legacy payments, paid for by a £622 million top-slice of Revenue Support Grant

• a new Lower Tier Services Grant of £111 million distributed to local authorities with responsibility for lower tier services, according to assessed relative needs. This new grant includes a one-off minimum funding floor that will ensure that no authority sees an annual reduction in Core Spending Power

• increasing the Rural Services Delivery Grant by £4 million, taking the total to £85 million – the highest ever, with the distribution remaining unchanged

• removing Visible Lines for grants rolled into the settlement at previous Spending Reviews.

2. Responses to the consultation

3. The 155 responses received to this consultation have been given full consideration as part of the development of the final local government finance settlement for 2021-22, alongside other representations made during the consultation period. The government is very grateful to everyone who took time to respond to the consultation.

4. The table below gives a breakdown of consultation responses included in this analysis by the type of respondent.

Organisation type	Count	% of total responses
Shire District	49	31.6%
Metropolitan District	24	15.5%
Unitary Authority	19	12.3%
Shire County	17	11.0%
London Borough	12	7.7%
Fire Authority	8	5.2%
Combined Authority	1	0.6%
Greater London Authority	1	0.6%
Local Authority Association	11	7.1%
Parish or Town Council	7	4.5%
Member of Parliament	2	1.3%
Charity	4	2.6%
Grand Total	155	100%

5. This document provides an overview of the responses received but does not attempt to capture every point made in response.

6. Percentages are calculated from the number of respondents that responded to the consultation. This will include those that selected ‘no comment’ as an option.

3. Distribution of Revenue Support Grant

Question 1 – Do you agree with the government’s proposed methodology for distribution of Revenue Support in 2021-22?

Number of responses: 155
Respondents supporting the proposal: 95 (61%)
Respondents opposing the proposal: 28 (18%)
Respondents that had no comments or the policy area did not apply to them: 32 (20%)

7. The provisional consultation sought views on an increase in Revenue Support Grant in line with inflation.

8. There was strong support for the government’s proposals to have a uniform percentage increase in Revenue Support Grant, with 95 respondents (61%) in favour. There were 28 (18%) of respondents who disagreed with the proposals.

9. Some had comments on the overall level of RSG, with 29 respondents saying that the level of RSG is not enough to meet local demand. 40 respondents used this question to request a multi-year funding settlement, and 27 respondents expressed concern about the decision not to implement funding reform in 2021-22.

10. The level of funding proposed in the provisional consultation was set within the context of the 2020 Spending Review. The government decided not to implement reform in 2021-22 so that councils can focus on the pandemic rather than a complex reform programme, and the current situation is also behind the one-year settlement. The government agrees that multi-year settlements are beneficial for long-term planning and aims to return to these at the next Spending Review.

4. Council Tax

Question 2 – Do you agree with the proposed package of council tax referendum principles for 2021-22?

Number of responses: 155
Respondents supporting the proposal: 36 (23%)
Respondents opposing the proposal: 93 (60%)
Respondents that had no comments or the policy area did not apply to them: 26 (17%)

11. The provisional consultation sought views on its proposed package of referendum principles for 2021-22.

12. Rather than explicitly stating a view on the package, many responses expressed opposition to council tax referendum principles in general.

13. 80 respondents (52%) directly opposed council tax referendum principles and argued they should not exist and council tax should be an entirely local decision.

14. Additional responses to this question included 39 (25%) respondents who commented that council tax was an unsustainable way of funding local government, and 26 (17%) respondents who commented that local residents would struggle to afford increases.

15. There were also 49 responses from Shire Districts of which 26 asked for the £5 flexibility to be increased to a higher level.

16. The government notes the arguments put forward by a majority of respondents against the proposals. However, council tax referendum principles remain a Manifesto commitment, and the government believes that the package of principles strikes a balance between ensuring local authorities have access to sufficient resources and giving local residents the final say on excessive increases. We are also providing councils with £670m of new grant funding to enable them to continue reducing the council tax bills of those least able to pay, including households who are impacted financially by the pandemic.

17. As such, the government has decided to continue with these referendum principles for the 2021-22 final settlement.

5. Social care funding

Question 3 – Do you agree with the government’s proposals for the Social Care Grant in 2021-22?

Number of responses: 155
Respondents supporting the proposal: 72 (46%)
Respondents opposing the proposal: 17 (11%)
Respondents that had no comments or the policy area did not apply to them: 66 (42%)

18. The provisional consultation asked for views on the government’s plans to increase grant funding across adult and children’s social care.

19. The proposals, which included £1.41 billion of social care grant that was rolled forward from 2020-21 and £300 million of additional grant funding, including an element of grant equalisation, were supported by 72 (46%) respondents to the provisional consultation.

20. There were 17 (11%) respondents who opposed the proposals. 38 respondents welcomed the £300 million increase in grant, but 15 respondents stated that the overall quantum was still not enough to meet demand.

21. Additional responses to this question included 22 (14%) respondents who commented that the allocation formula needed updating. A minority of respondents expressed concern on the use of the Adults Social Care Relative Needs Formula to distribute funding across both adult and children’s social care. 22 (14%) of respondents highlighted the growing pressures on children’s social care.

22. 30 respondents said that social care should not be funded through council tax, arguing that it was unsustainable, with some mentioning that a long-term solution for funding social care must be put in place. 6 respondents directly agreed with the use of grant funding to equalise the varying yields from the adult social care council tax precept while also mentioning that there should be more equalisation.

23. After considering the responses to the provisional consultation, the government has decided to include these proposals as they represent the best available approach to allocating resources made available at the Spending Review. Government plans to return to reform of the funding system once the pandemic is through.

Question 4 – Do you agree with the governments proposals for iBCF in 2021-22?

Number of responses: 155
Respondents supporting the proposal: 89 (57%)
Respondents opposing the proposal: 9 (6%)
Respondents that had no comments or the policy area did not apply to them: 57 (37%)

24. The provisional consultation sought views on the government’s proposals to continue existing improved Better Care Fund (iBCF) funding at 2020-21 levels (£2.1 billion). There was strong support for the government’s plans, with only 9 (6%) expressing disagreement.

25. There were 10 respondents that argued that the Disabled Facilities Grant, within iBCF, should be paid directly to districts.

26. 18 respondents mentioned that the iBCF should also rise in line with inflation like the core settlement.

27. The government has decided to continue with the proposal for iBCF as part of the final local government finance settlement for 2021-22.

6. New Homes Bonus

Question 5 – Do you agree the with the government’s proposals for New Homes Bonus in 2021-22?

Number of responses: 155
Respondents supporting the proposal: 66 (43%)
Respondents opposing the proposal: 45 (29%)
Respondents that had no comments or the policy area did not apply to them: 44 (28%)

28. The provisional settlement outlined the government’s plans for New Homes Bonus in 2021-22.

29. 66 (43%) respondents to this question supported the government’s proposals for New Homes Bonus on 2021-22.

30. Of the 155 respondents, 27 (17%) disagreed with the government’s proposal for no legacy payments for allocations made in 2021-22.

31. Additional responses to the question included 23 (15%) who commented that the money used to fund New Homes Bonus should instead be distributed according to need across all authorities

32. 53 (34%) respondents looked forward to the planned consultation on New Homes Bonus reform.

33. After considering these responses, and particularly given the commitment to reform NHB next year, the government has decided to continue with these proposals for the final local government finance settlement. We plan to publish the New Homes Bonus consultation shortly.

7. Lower Tier Services Grant

Question 6 – Do you agree with the government’s proposal for a new Lower Tier Services Grant, with a minimum funding floor so that no authority sees an annual reduction in Core Spending Power?

Number of responses: 155
Respondents supporting the proposal: 84 (54%)
Respondents opposing the proposal: 29 (19%)
Respondents that had no comments or the policy area did not apply to them: 42 (27%)

34. At the provisional consultation, the government proposed including a new Lower Tier Services Grant, totalling £111 million.

35. The proposed grant methodology is two-fold: £86 million will be allocated according to the lower tier 2013-14 Settlement Funding Assessment, which represents the best available relative needs assessment for the authorities concerned. £25 million will ensure no authority sees an annual reduction in Core Spending Power. The latter is a one-off in response to current exceptional circumstances.

36. At the provisional consultation, 84 (54%) respondents agreed with the government’s proposal while 29 (19%) were opposed.

37. Additional responses to the question included 35 (23%) who commented that they would like the funding floor to be retained in future years.

38. After considering these responses, the government has decided to continue with these proposals, including the one-off funding floor, for the final local government finance settlement for 2021-22.

8. Rural Services Delivery Grant

Question 7 – Do you agree with the government’s proposals for Rural Services Delivery Grant in 2021-22?

Number of responses: 155
Respondents supporting the proposal: 56 (36%)
Respondents opposing the proposal: 40 (26%)
Respondents that had no comments or the policy area did not apply to them: 59 (38%)

39. At the provisional consultation, the government proposed to increase the Rural Services Delivery Grant by £4 million, taking the total to £85 million – the highest ever.

40. Allocations are distributed to the top quartile of local authorities on the basis of the ‘super-sparsity’ indicator, which ranks authorities by the proportion of the population which is scattered widely, using Census data and weighted towards the authorities with the sparsest populations.

41. At the provisional consultation, 56 (36%) of respondents agreed with the government’s proposal whereas 40 (26%) were opposed.

42. Additional responses to the question included 45 (29%) who commented that they disagreed with the allocation methodology, many arguing that the upper quartile approach creates a “cliff-edge” where authorities who consider themselves rural but are not in the upper quartile do not receive funding.

43. After considering these responses, and in the interests of stability, the government has decided to continue with this proposal as part of the final local government finance settlement for 2021-22.

9. Visible Lines

Question 8 – Do you have any comments on the government’s plan not to publish Visible Lines?

Number of responses: 155
Respondents that had comments: 60 (39%)
Respondents that did not have comments: 95 (61%)

44. The government invited views through the provisional consultation on the plan to cease publishing the current set of Visible Lines, for grants rolled in pre-2016-17.

45. Of the 155 respondents, 95 (61%) did not have any comments on the government’s proposal.

46. 35 (23%) respondents directly agreed with their removal, many calling the figures misleading.

47. 11 (7%) respondents disagreed, arguing that Visible Lines were important for transparency.

48. Considering that a majority of respondents had no comment on the proposal, and that more respondents agreed with their removal than disagreed, the government will no longer produce Visible Lines for grants rolled in pre-2016-17.

10. Equalities statement

Question 9 – Do you have any comments on the impact of the proposals for the 2021-22 settlement outlined in this consultation document on persons who share a protected characteristic? Please provide evidence to support your comments.

Number of responses: 155
Respondents that had comments: 50 (32%)
Respondents that did not have comments: 105 (68%)

49. The government invited views through the provisional consultation on the impact of the proposals in the 2021-22 settlement on persons who share a protected characteristic.

50. 50 respondents had specific comments. Some responses drew attention to the impact on persons with specific protected characteristics, with 13 respondents (8%) commenting that local authorities should be given more funding to protect the elderly.

51. Responses to this question have been considered and taken into account as the government takes decisions on the final settlement. An equalities statement is published alongside the final settlement.