Consultation outcome

Provisional local government finance settlement 2022-23 consultation: summary of responses

Updated 7 February 2022

1. Introduction

1. The Department for Levelling Up, Housing and Communities published the provisional local government finance settlement for 2022/23 on 16 December 2021. The consultation closed on 13 January 2022.

2. The provisional settlement proposed:

• a uniform percentage increase in Revenue Support Grant (RSG) allocations from 2022/23, based on the change in the Consumer Price Index (CPI) and the rolling in of two existing New Burdens grants^{[footnote 1]}
• 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 2022/23 by £636 million, bringing the total value of the grant to £2.35 billion. These resources are distributed using the Adult Social Care Relative Needs Formula (RNF), including a sum of £80 million for equalisation of the impact of the adult social care council tax precept
• increasing the improved Better Care Fund (iBCF) at 2022/23 in line with the September 2020/21 increase in the Consumer Price Index (CPI)
• a new round of New Homes Bonus (NHB) payments in 2022/23, which will not attract new legacy payments, paid for by a £554 million top-slice of Revenue Support Grant
• a Lower Tier Services Grant of £111 million distributed to local authorities with responsibility for lower tier services, according to assessed relative needs. Alongside this, the minimum funding floor from will be updated to ensure that no authority sees an annual reduction in Core Spending Power
• rolling forward the 2021/22 allocations of the £85 million Rural Service Delivery Grant for 2022/23, with the distribution and quantum of the grant unchanged

3. This publication outlines the government response to the consultation and confirms the final proposals for the 2022/23 local government finance settlement.

2. Responses to the consultation

4. The 148 responses received to this consultation have been given full consideration as part of the development of the final local government finance settlement for 2022/23, alongside other representations made during the consultation period. Government is grateful to everyone who took time to respond to the consultation.

5. The table below gives a breakdown of consultation responses by the type of respondent.

Organisation type	Count	% of total responses
London Borough	9	6.1%
Metropolitan District	17	11.5%
Unitary Authority	22	14.9%
Shire County	10	6.8%
Shire District	40	27.0%
Fire and Rescue Authority	17	11.5%
Parish or Town Council	6	4.1%
Local Authority Association or Special Interest Group	10	6.8%
Other organisation types consisting of: Other Local Authority Grouping, Local Authority Officer, Local Authority Councillor, Member of Parliament, Other Representative Group, Business, and Greater London Authority	17	11.5%
Not Answered	0	0.0%
Total	148	100%

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

7. Percentages are calculated from the number of respondents that responded to the consultation. This will include those that selected ‘no comment’ as an option. A number of responses provided a text comment but did not specify whether they agreed or disagreed on the scale provided. These comments have been considered as part of the consultation. For the numerical analysis of each question, we have put them as not specifying a view on the scale provided.^{[footnote 2]}

3. Revenue Support Grant proposals

Question 1 – Do you agree with the government’s proposed methodology for the distribution of Revenue Support Grant in 2022/23, including the rolling in of two New Burdens grants?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 71 (48%)
Respondents neither agreeing nor disagreeing with the proposal: 7 (5%)
Respondents who disagreed or strongly disagreed with the proposal: 25 (17%)
Respondents who had no comments or did not specify their view on the scale provided: 45 (30%)

8. The provisional consultation sought views on an increase in the Revenue Support Grant in line with inflation and the consolidation of two small New Burden grants: Financial Transparency of Local Authority Maintained Schools grant and Individual Electoral Registration grant.

9. There was strong support for the government’s proposals to have a uniform percentage increase in Revenue Support Grant, with 71 respondents (48%) in favour. There were 25 respondents (17%) who disagreed with the proposals.

10. 26 respondents (18%) commented that the increase in Revenue Support Grant was not sufficient, and 31 respondents (21%) requested that we provide more than one year of allocations.

11. 23 respondents (16%) also disagreed with the proposed approach to roll in New Burdens grants, in particular outlining that in principle the funding should continue to go to the tier of local government the funding went towards prior to consolidation.

12. The government notes the arguments put forward on the approach to consolidate the two small New Burdens grants. However, the purpose of the consolidation is to simplify the funding system, and we intend to proceed with the proposed approach which we deem proportionate for these grants.

13. Having considered the responses to the consultation, the government intends to move forward with the provisional proposal to apply an inflationary uplift to the Revenue Support Grant and the proposed rolling in of grants.

4. Council tax

Question 2 – Do you agree with the proposed package of council tax referendum principles for 2022/23?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 25 (17%)
Respondents neither agreeing nor disagreeing with the proposal: 10 (7%)
Respondents who disagreed or strongly disagreed with the proposal: 75 (51%)
Respondents who had no comments or did not specify their view on the scale provided: 38 (26%)

14. The consultation on the provisional settlement sought views on the government’s proposed package of referendum principles for 2022/23.

15. 79 respondents (53%) argued referendum principles should not be set for local authorities, highlighting their accountability to the electorate.

16. 72.5% of responses from shire district councils argued for a higher referendum principle, for example a £10 principle to match that for police authorities. 70.6% of the fire and rescue authorities who responded argued that the proposed £5 flexibility should be extended to the whole sector.

17. 41 respondents (28%) of respondents indicated that the proposed referendum principles may not provide sufficient flexibility to enable their local authority to meet their service pressures for 2022/23 without holding a referendum.

18. 29 respondents (20%) argued that the benefits of the flexibilities provided by the proposed referendum principles would be absorbed by the increased rate of inflation.

19. 25 respondents (17%) argued that the settlement should take greater account of the circumstances of authorities which have lower-than-average band D council tax levels or smaller tax bases. The importance of equalisation grants was also highlighted.

20. The provisional settlement consultation indicated that the government would consider any proposals made by the London Mayor regarding the future level of the Greater London Authority (GLA) precept. The mayor has requested a further £20 flexibility as part of a wide-ranging programme of exceptional measures to ensure the sustainable future funding of Transport for London.

21. The government has considered the arguments put forward by a majority of respondents against the proposals, including the representations in favour of lifting referendum principles completely. The government believes that the overall package set out in the provisional settlement strikes an appropriate balance between ensuring local authorities have access to sufficient resources to deliver local services and protecting residents from excessive council tax increases.

22. Government has therefore decided to continue with the referendum principles at the final settlement, with the addition of a further £20 flexibility for the Greater London Authority (GLA).

5. Distribution of social care resources

Question 3 – Do you agree with the government’s proposals for the Social Care Grant in 2022/23?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 25 (17%)
Respondents neither agreeing nor disagreeing with the proposal: 18 (12%)
Respondents who disagreed or strongly disagreed with the proposal: 19 (13%)
Respondents who had no comments or did not specify their view on the scale provided: 86 (58%)

23. The provisional consultation sought views on the government’s proposal to increase allocations of the Social Care Grant to £2.35 billion from 2022/23. The proposal also included an increase of £80 million to the equalisation component against the Adult Social Care precept, with the remaining money to be distributed directly through the existing Relative Needs Formula (RNF).

24. 25 respondents (17%) agreed with the proposals while 19 (13%) expressed disagreement.

25. 42 respondents (28%) welcomed the increase in funding, while 39 (26%) argued this would be insufficient to meet social care pressures. Lack of investment in children’s social care despite growing pressures was a commonly cited concern and other responses cited the wider context of other financial pressures, such as rising National Insurance contributions and the National Living Wage increase. 9 respondents (6%) highlighted that one-year allocations impede effective medium-long term financial planning.

26. Additional responses included 9 respondents (6%) who challenged the proposal to use the Adult Social Care Relative Needs Formula (ASC RNF), arguing that it is outdated, while 13 respondents (9%) welcomed that the grant is intended to be un-ringfenced. 14 respondents (9%) stated a preference for a greater equalisation component against the Adult Social Care (ASC) precept.

27. Having considered the responses to the consultation, the government has decided to continue with the proposals for the Social Care Grant as they represent the best available approach to allocating the resources made available at the Spending Review.

Question 4 – Do you agree with the government’s proposals for the improved Better Care Fund in 2022/23?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 53 (36%)
Respondents neither agreeing nor disagreeing with the proposal: 15 (10%)
Respondents who disagreed or strongly disagreed with the proposal: 7 (5%)
Respondents who had no comments or did not specify their view on the scale provided: 73 (49%)

28. The provisional consultation sought views on the government’s proposals to provide an inflationary uplift of £63 million to the 2022/23 iBCF, and to maintain the existing distribution formula. There was support for the government’s plans, with only 7 respondents expressing disagreement.

29. 49 respondents (33%) welcomed the uplift in the funding, but 26 (18%) commented that the increase would not be sufficient, with most mentioning rising inflation rates.

30. Additional responses to this question included 8 respondents (5%) who highlighted the lack of certainty about future funding, and 6 (4%) who stated that the methodology used to distribute the funding is outdated. 4 respondents (3%) argued that the separate Disabled Facilities Grant should be paid directly to districts.

31. Government intends to continue with the proposal consulted on for the iBCF, for the 2022/23 local government finance settlement.

Question 5 – Do you agree with the government’s proposals for distributing the Market Sustainability and Fair Cost of Care Fund in 2022/23?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 30 (20%)
Respondents neither agreeing nor disagreeing with the proposal: 23 (16%)
Respondents who disagreed or strongly disagreed with the proposal: 12 (8%)
Respondents who had no comments or did not specify their view on the scale provided: 83 (56%)

32. The consultation sought views on the government’s proposals for distributing the Market Sustainability and Fair Cost of Care Fund in 2022/23 using the existing Adult Social Care Relative Needs Formula (ASC RNF).

33. 30 respondents (20%) supported the government’s distribution proposals whereas 12 (8%) disagreed. Of the 12 respondents who disagreed with proposals for distributing the funding, 2 (1%) thought that the distribution should be linked to the impact of charging reform and 2 (1%) said that it should be linked to fee rates. 16 respondents (11%) acknowledged that there may need to be a new or updated formula to distribute this funding, with comments primarily focussed on how the proposed distribution did not fully address rural issues and differences in cost pressures across the country.

34. 28 respondents (19%) were concerned about the sufficiency of the funding being provided. 10 respondents (7%) commented that the policy would have a greater financial impact on authorities with higher proportions of self-funders. 9 respondents (6%) questioned the decision to include this funding in Core Spending Power calculations.

35. There was no explicit disagreement with the funding conditions and only 1 respondent (1%) directly expressed disagreement with the timelines set out as part of the funding conditions published by the Department of Health and Social Care (DHSC).

36. Considering that a majority of respondents had no comments on the proposal and that more respondents agreed than disagreed, government intends to proceed with the proposed distribution for the 2022/23 local government finance settlement.

37. The DHSC will work closely with local government to determine appropriate grant conditions, national guidance, and distribution mechanisms for funding allocations in 2023/24 and 2024/25.

6. Services Grant 2022/23 

Question 6 – Do you agree with the government’s proposals for a one-off 2022/23 Services Grant distributed using 2013/14 shares of the Settlement Funding Assessment?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 56 (38%)
Respondents neither agreeing nor disagreeing with the proposal: 13 (9%)
Respondents who disagreed or strongly disagreed with the proposal: 27 (18%)
Respondents who had no comments or did not specify their view on the scale provided: 52 (35%)

38. We consulted on distributing £822 million as a new 2022/23 Services Grant using 2013/14 Settlement Funding Assessment shares. We outlined this grant would be one-off and would not be part of transitional protections for any future reform. We also outlined this grant included compensation for additional National Insurance costs.

39. 46 respondents (31%) outlined the challenges of a one-off allocation for long term planning. This included concern over the continued compensation for National Insurance costs with this being a one-off grant allocation.

40. 35 responses (24%) highlighted concern over this grant being excluded from transitional protections. Another point raised related to updating the system by 20 respondents (14%) was that we should not be using an outdated assessment of need to distribute this funding.

41. Government agrees that longer term certainty is beneficial for long-term financial planning. We will work closely with the sector on options for this grant to support on that objective from 2023/24 onwards.

42. Having considered the responses to the consultation, government intends to move forward with the provisional proposal. We are committed to working closely with local government stakeholders on how to best distribute this money for 2023/24 onwards.

43. Alongside the consultation, we also received representations from the Isle of Wight Council about the unique circumstances of the island and its physical separation from the mainland.

7. Other grants: New Homes Bonus, Rural Services Delivery Grant and Lower Tier Services Grant

Question 7: Do you agree with the government’s proposals for New Homes Bonus in 2022/23?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 49 (33%)
Respondents neither agreeing nor disagreeing with the proposal: 15 (10%)
Respondents who disagreed or strongly disagreed with the proposal: 26 (18%)
Respondents who had no comments or did not specify their view on the scale provided: 58 (39%)

44. The provisional settlement outlined the government’s plans for a new round of NHB payments in 2022/23. The new payments would not attract new legacy payments, but we proposed to honour the final outstanding NHB legacy payment. This would mean a total of 2022/23 NHB allocations of £554 million paid for by a top slice of Revenue Support Grant.

45. 49 (33%) respondents supported the proposal while 26 (18%) were opposed.

46. 19 respondents (13%) welcomed the continuation for a further year and 14 (9%) argued that legacy payments should not be phased out.

47. The main point raised by those who did not support the proposals was disagreement with the distribution of NHB as outlined by 21 respondents (14%). 19 respondents (13%) argued the funding should be distributed on the basis of need.

48. 42 respondents (28%) requested early certainty on the future of the scheme.

49. After considering these responses, government intends to proceed with the proposals consulted on. Following representations, it should also be noted that total NHB allocations have increased to £556 million from the £554 million consulted on. We plan to publish next steps on the future of the NHB soon.

Question 8 – Do you agree with the government’s proposals for the Rural Services Delivery Grant in 2022/23?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 41 (28%)
Respondents neither agreeing nor disagreeing with the proposal: 17 (11%)
Respondents who disagreed or strongly disagreed with the proposal: 28 (19%)
Respondents who had no comments or did not specify their view on the scale provided: 62 (42%)

50. Government consulted on rolling forward the 2021/22 allocations of the £85 million Rural Services Delivery Grant for 2022/23, with the distribution and quantum of the grant unchanged.

51. 41 respondents (28%) supported the proposals compared to 28 (19%) who clearly outlined they did not.

52. 28 respondents (19%) argued the amount of funding should increase, while a similar number, 31 respondents (21%), argued that we should not be providing additional funding to rural areas.

53. 24 respondents (16%) disagreed with the proposed methodology. These were often from authorities who considered themselves as covering rural areas, but which did not receive funding as they were not in the upper quartile of sparsity.

54. After consideration of responses, government intends to proceed with the approach consulted on in the interest of stability for the 2022/23 local government finance settlement.

Question 9 – Do you agree with the government’s proposals for the Lower Tier Services Grant, with an updated minimum funding floor in 2022/23 so that no authority sees an annual reduction in Core Spending Power?

Number of responses: 148
Respondents who strongly agreed or agreed with the proposal: 63 (43%)
Respondents neither agreeing nor disagreeing with the proposal: 12 (8%)
Respondents who disagreed or strongly disagreed with the proposal: 18 (12%)
Respondents who had no comments or did not specify their view on the scale provided: 55 (37%)

55. We consulted on the continuation of the Lower Tier Services Grant that was brought in last year (2021/22). We proposed that the quantum remain the same (£111 million) but with an updated cash terms Core Spending Power funding floor.

56. 63 respondents (43%) agreed with the proposal, and 18 respondents (12%) disagreed.

57. 15 respondents (10.14%) disagreed with the distribution methodology. 13 respondents (8.78%) considered that the cash floor was too low and should therefore be raised.

58. 16 respondents (11%) requested longer term certainty on allocations, while 12 respondents (8%) requested a continued or more generous funding floor for future years.

59. Alongside the limited opposition to this proposal, the funding floor element of this grant ensures a level of stability for local authorities who would otherwise see a reduction in Core Spending Power. Government therefore intends to proceed with the proposal consulted on for the 2022/23 local government finance settlement.

8. Equalities impacts of these proposals

Question 10 – Do you have any comments on the impact of the proposals for the 2022/23 settlement outlined in this consultation document on persons who share a protected characteristic, and on the draft policy impact statement published alongside the consultation document? 

Number of responses: 148
Respondents that had comments: 52 (35%)
Respondents that had no comment: 96 (65%)

60. The government invited views through the provisional consultation on the impact of the proposals in the 2022/23 settlement on persons who share a protected characteristic.

61. 52 respondents (35%) stated they had comments. Of these, 29 respondents (20%) argued the settlement negatively impacted persons who share a protected characteristic. 24 respondents (16%) argued more funding should go towards protecting the elderly and 14 respondents (9%) argued more funding should go towards protecting and supporting children.

62. Responses to this question have been considered in government taking decisions on policy for the final settlement. A policy impact statement has been published alongside the final settlement.

1. Financial Transparency of Local Authority Maintained Schools grant and Individual Electoral Registration grant. ↩

2. This approach was taken to avoid making an incorrect subjective judgement on the strength of feeling of respondents on each question. Therefore, when we state the ‘respondents who had no comments or did not specify their view on the scale provided’ for each individual question, this includes responses who provided comments, but we avoided making such a judgement on. ↩