Government promises return to multi-year settlements “when circumstances allow”

The Government has said it plans to return to multi-year settlements in the next Parliament "when circumstances allow", has no plan to re-evaluate council tax bands, and will not reset the business rates retention system before 2025-26.

The comments came in a formal response to the Levelling Up, Housing and Communities Committee report on financial distress in local authorities, which made a series of recommendations aimed at fixing what it called an "out of control financial crisis" in local councils.

At the time of publication in February, Clive Betts MP, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said the funding model for local councils "is broken", the business rates system is "overly complex and in need of reform" and that Ccouncil tax is "outdated and increasingly regressive".

Among the Committee’s recommendations was a call for a review of Education, Health and Care (EHC) plans, reform to special educational needs and disabilities (SEND) provision and changes to the business rates system.

However, in its response to the recommendations published Monday (25 March), the Government found that a review of SEND provision would be "unnecessary", as it is already implementing an improvement plan first launched in 2023.

The Government also said that a reset of the business rates retention system – as recommended by the Committee – will not happen before 2025-26 but agreed to "consider further improvements in the area".

On its intention to return to multi-year settlements in the next Parliament, the Government said: "Spending decisions beyond 2024-25 are a matter for the next spending review.

"It was therefore not possible to deliver a multi-year Settlement this year without clarity on departmental budgets into the next spending review period."

Turning to changing council tax bands, the Government said it "has no plans to conduct" a revaluation, as it would be expensive to undertake and would risk penalising those on a lower income.

The Government also reaffirmed a commitment to "continuing to protect local taxpayers from excessive council tax increases" in response to a recommendation to raise the referendum threshold for council tax to be in line with a relevant measure of inflation and, in the long term, eliminate the threshold completely.

It said: "The government believes that any increases above the current referendum threshold, where the government has provided additional flexibility, should only be considered in the most serious of circumstances."

Elsewhere, the Government said it would explore the case for increased investment in social care services where the evidence demonstrates it must do so - and that it is "considering" what more can be done to support councils in getting expert help to meet a child's complex medical needs on transport.

On childcare, the Government also said it is working to improve the sustainability of the placements market, "including introducing financial oversight of private providers".

Adam Carey