City council leader praises much-needed ‘lifeline’

The Labour government, which came into power this summer, announced this week an extra £700 million for English council budgets next year as it looks to “rebuild the foundations”.

The top-up brings additional grant funding for next year to around £2 billion, which means councils in England would see, on average, a 3.5 per cent real-terms increase in ‘core spending power’.

The Local Government Finance Settlement was welcomed by Labour-run Birmingham City Council, which declared itself effectively bankrupt last year and has since passed an unprecedented wave of cuts to services.

“Today’s news demonstrates the difference that a Labour Government makes,” council leader John Cotton said on Wednesday, December 18.

“After 14 years of neglect, local government is now receiving the lifeline that it so urgently needs.

“The increase to our funding will further help to put the council back onto the path to financial sustainability and deliver the services our residents need.”

But the Local Government Association (LGA) warned the extra funding would help councils meet some, but not all, the challenges they faced.

They include pressures in adult and children’s social care, homelessness prevention and support for young people with special educational needs and disabilities.

“Councils of all types will continue to struggle to balance the books next year with many having to increase council tax bills to bring in desperately needed funding but still being forced to make further cuts to services,” Councillor Louise Gittins, chair of the LGA, said.

“Councils continue to face severe cost and demand pressures and the recently launched Spending Review will be critical to the future of our local services.”

Councillor Cotton himself also warned the city council would “still need to make some difficult decisions”.

“But we will continue to work with the government and our Labour Mayor to put our council back on track and build a bright future for Birmingham,” he added.

Minister of State for Local Government and English Devolution, Jim McMahon, said up to £3.7 billion extra funding for social care authorities would be made available next year.

“As a former council leader I know too well that councils have suffered from short-term solutions,” he said.

“But we will fix this outdated system, turning to our partners in local government, working hand in hand to bring ambitious reform and do the long-term, necessary work to rebuild the foundations, and crucially, trust.”

Deputy Prime Minister, Angela Rayner, said: “I know our councils are doing everything they can to stay afloat and provide for their communities day in day out. 

“We won’t take the easy option or shy away from the hard work needed to rebuild a more effective and efficient system.

“These kind of reforms won’t happen overnight but we are determined to deliver fairer funding, ending postcode lotteries meaning everyone gets the support from public services they deserve.”

Councillor Cotton also welcomed the government’s new funding boost to tackle homelessness, saying: “We will have £17.7 million of fresh funding to invest in tackling this crisis and preventing people from becoming homeless.”

Other future changes include a move towards multi-year funding settlements, the first of which is set to be brought forward in 2026-27 and mean budgets would cover a minimum of two years.

The government said it would provide “greater certainty and stability” to councils.

The extra funding announced this week includes £515 million of further funding to support councils with the increase in employer National Insurance Contributions.

Birmingham-specific factors, such as the Oracle system and equal pay debacles, played a role in the city council’s financial crisis as did previous funding cuts and the rising demand for services.