Minister announces £6.3 billion Local Government Funding Settlement

Overall core unhypothecated revenue funding for councils will increase by 3.8% on a like-for-like basis compared to this year, to more than £4.6bn.

The like-for-like settlement increase of £172m and increases in specific grants reflects the priority the Welsh Government is giving to local government within its overall budget.

Local authorities will continue to share £198 million in General Capital Funding (GCF) for 2021-22, which is funding to spend on their priorities and statutory obligations. This includes £20 million for the public highways refurbishment grant, including support for active travel. It also includes the continuation of an additional £35 million of general capital grant, which will enable local authorities to respond to our mutual priorities of decarbonisation, housing and economic recovery following COVID-19.

Last year’s announcement saw an increased settlement for local authorities. This year’s settlement includes a further increase in revenue funding.

Specific allocations within this include:

• The continuation of £4.8m for authorities to provide additional discretionary rates relief for local businesses and other ratepayers to respond to specific local issues;
• Continuing funding for Ministers’ proposals for new eligibility criteria for free school meals, given the continued rollout of Universal Credit by the UK Government;
• Funding directed into education to meet local government commitments on the 2020/21 teacher’s pay deal.

Alongside the core settlement allocations, the Minister for Housing and Local Government has published the latest information on specific grants planned for the forthcoming financial year. On top of the £198m General Capital Funding, more than £520m of capital grants are planned for next year, with latest estimates of planned specific revenue grants totalling nearly £1bn.

Julie James said:

“This provides a stable platform for local authorities to plan their budget and, building on significant funding this year, is as good a settlement as I can offer. While local government faces significant pressures, particularly in relation to the pandemic, this increase in core revenue funding will enable councils to support and deliver valuable local services.

“This year, more than ever, we have seen how essential Local Government is to how we all live and particularly for the most vulnerable in our communities. This funding is a recognition of the crucial role of local authorities in our national mission to improve education, provide social care, tackle poverty and fight climate change.

“I have discussed with council leaders our shared recognition of the need to invest in social housing and I hope that this settlement will assist councils to increase the scale and pace of housebuilding in Wales.”

In this financial year we are providing over £1bn to local government to respond to the impacts of the pandemic.  The Finance Minister’s budget statement this year confirms that other than funding for some specific areas, including the provision of free school meals, funding to respond to the impacts of the pandemic will be considered separately and does not form part of this settlement.

The Welsh Government Local Government Settlement is open for a seven-week period of formal consultation.