Policy paper

Explanatory note on core spending power

Published 6 February 2023

This was published under the 2022 to 2024 Sunak Conservative government

Applies to England

1. Core Spending Power is a measure of the resources available to local authorities to fund service delivery. It sets out the money that has been made available to local authorities through the Local Government Finance Settlement (LGFS).

2. The tables included here set out figures for local authority Core Spending Power from 2015-16 through to 2023-24. Figures for 2015-16 have been adjusted to ensure a consistent measure of local authority income over time.

Calculation of Core Spending Power from 2016-17 through to 2023-24

3. The Core Spending Power figures from 2016-17 through to 2023-24 are derived from the sum of the following components:

4. For 2016-17 to 2023-24 the Settlement Funding Assessment amounts as set out in the LGFS.

5. For 2016-17 to 2022-23 a Section 31 grant to compensate local authorities for under-indexation of the business rates multiplier in 2014-15, 2015-16, for the switch to Consumer Price Index for the purposes of uprating the multiplier from 2018-19 onwards, and the freezing of the multiplier for 2021-22. In 2022-23 under-indexation grant has been calculated to increase in line with the change in Retail Price Index between September 2020 and September 2021. In 2023-24 under-indexation grant has been calculated to increase in line with the change in Retail Price Index between September 2021 and September 2022, minus the inflationary uplift remaining in the BFL multiplier as set out in the LGFS.

6. For 2016-17 to 2023-24 the council tax requirement excluding parish precepts. Council tax figures for 2016-17 to 2022-23 reflect data from the council tax levels in England statistical releases. For 2023-24, the figures have been estimated by:

• Applying each local authority’s average annual growth in their council tax base between 2018-19 and 2022-23 to project growth in tax base for 2023-24; and
• Assuming local authorities increase their Band D council tax in line with the maximum allowable level set out by the council tax referendum principles for 2023-24. That is a 3% core principle, 2% Adult Social Care precept, the greater of 3% or £5 cash principle for shire districts, and the greater or 2% or a cash principle of £10 for the Greater London Authority, and the greater or 2% or a cash principle of £10 police element of the Greater London Authority.
• These calculations do not take into account the additional flexibility granted by the Secretary of State to Croydon, Thurrock and Slough Councils to increase council tax in 2023-24 by an additional 10%, 5% and 5%, respectively, above the referendum principles applied to other councils. This additional flexibility has been granted in very specific circumstances, where the scale of the issues facing the councils is exceptional.

7. For 2017-18 to 2023-24, the improved Better Care Fund. This represents a total of £1,115 million in 2017-18, £1,499 million in 2018-19, £1,837 million in 2019-20 and £2,077 million in 2020-21 and 2021-22, and £2,140 million in 2022-23. The £2,000 million additional funding announced at Spring Budget 2017 is included in these totals. For 2020-21 and 2021-22, the improved Better Care Fund is maintained at 2019-20 levels, with the addition of £240 million which was allocated as Winter Pressures Grant in 2019-20 using the adult social care relative needs formula. For 2022-23, the improved Better Care Fund is uprated in line with the Consumer Price Index. For 2023-24, the improved Better Care Fund allocations are unchanged.

8. For 2017-18 and 2018-19, an Adult Social Care Support Grant of £241 million and £150 million, respectively. This is distributed using the adult social care relative needs formula.

9. For 2018-19 and 2019-20, a £240 million Winter Pressures Grant distributed using the adult social care relative needs formula.

10. For 2019-20, a £410 million Social Care Support Grant distributed using the adult social care relative needs formula.

11. For 2020-21, a £1,410 million Social Care Grant comprising three elements:

• Retaining the £410 million in Social Care Support Grant from 2019-20, distributed using the adult social care relative needs formula;
• An additional £850 million distributed using the adult social care relative needs formula; and
• An additional £150 million to equalise the impact of the distribution of the adult social care council tax precept in 2020-21.

12. For 2021-22, a £1,710 million Social Care Grant comprising three elements:

• Retaining the £1,410 million in Social Care Grant from 2020-21;
• An additional £60 million distributed using the adult social care relative needs formula; and
• An additional £240 million to equalise the impact of the distribution of the adult social care council tax precept in 2021-22.

13. For 2022-23, a £2,346 million Social Care Grant comprising three elements:

• Retaining the £1,710 million in Social Care Grant from 2021-22;
• An additional £556 million distributed using the adult social care relative needs formula; and
• An additional £80 million to equalise the impact of the distribution of the adult social care council tax precept in 2022-23.

14. For 2023-24, a £3,852 million Social Care Grant comprising three elements:

• Retaining the £1,710 million in Social Care Grant from 2022-23;
• An additional £1,185 million distributed using the adult social care relative needs formula;
• An additional £160 million to equalise the impact of the distribution of the adult social care council tax precept in 2022-23; and
• Rolling in the 2022-23 allocations of the Independent Living Fund.

15. For 2016-17 to 2022-23, the New Homes Bonus. The Spending Review 2015 set out the overall envelope for New Homes Bonus payments over the period to 2019-20 as being £1,485 million for 2016-17, reducing to £900 million by 2019-20. £18 million was made available to maintain the NHB baseline for payments in 2019-20. The Spending Round 2019 maintained the overall funding at £900 million in 2020-21. £7 million was made available to maintain the NHB baseline for payments in 2020-21. Following the Spending Review 2021, 2022-23 NHB payments were made with a total funding of £556m. In 2023-24 NHB payments will be made with a total funding of 291m.

16. For 2016-17 and 2017-18, New Homes Bonus returned funding. Any unclaimed New Homes Bonus funding was returned to local authorities based on their share of 2013-14 adjusted Settlement Funding Assessment. In 2018-19, 2019-20 and 2020-21. In 2021-22, 2022-23 and 2023-24 any underspend is repurposed within the Local Government Finance Settlement.

17. For 2016-17 to 2021-22, the Rural Services Delivery Grant. This provides £80.5 million in 2016-17, £65 million in 2017-18, £81 million in 2018-19, 2019-20, 2020-21, and £85 million in 2021-22, 2022-23. In 2023-24, this was increased to £95 million. This funding is distributed to the top-quartile of authorities ranked by super-sparsity, in line with the distributional methodology for the Rural Services Delivery Grant in 2015-16.

18. For 2016-17 and 2017-18, a Transition Grant to provide funding to support the introduction of a new funding methodology at the outset of the 4-year deal period in 2016-17. This grant was worth £150 million in both 2016-17 and 2017-18.

19. For 2021-22 and 2022-23, a £111 million Lower Tier Services Grant comprising two elements:

• £86 million in 2021-22 and £92 million in 2022-23 distributed using shares of lower tier funding within the 2013-14 Settlement Funding Assessment; and
• £25 million in 2021-22 and £19 million in 2022-23 for a funding floor to ensure no authority has a total Core Spending Power less than in the previous year.
• For 2022-23, the floor calculation excludes the new elements of Revenue Support Grant.

20. For 2023-24 the £133 million Funding Guarantee grant ensures all local authorities receive a minimum 3% CSP increase from 2022-23, excluding any funding from:

• Increases to 2022-23 council tax levels;
• Grants rolled into Revenue Support Grant or Social Care Grant in 2023-24

21. For 2022-23, the £162 million Market Sustainability and Fair Cost of Care Fund to support local authorities, prepare markets for reform and move towards paying providers a fair cost of care. This is distributed using adult social care relative needs formula.

22. For 2023-24, the £162 million Market Sustainability and Fair Cost of Care Fund is rolled into a new ASC Market Sustainability and Improvement Fund, with an additional £400 million included for 2023-24, distributed using adult social care relative need formula.

23. For 2023-24, a £300 million Discharge Fund, distributed using the 2023-24 profile of improved Better Care Fund.

24. For 2022-23, a £822 million Services Grant designed to support all services delivered by councils, distributed using local authority shares of 2013-14 Settlement Funding Assessment, adjusted for local authority restructuring where necessary. For 2023-24, the Services Grant distribution profile was retained with grant funding totalling £483 million.